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Input substitutability, trade costs and location

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  • Michalski, Tomasz

Abstract

Constant unit manufacturing costs are lower (higher) in high wage North when inputs are (i) tradeable, (ii) country-specific and (iii) the elasticity of substitution between them is below (above) one. A two-country model of firm entry/location is considered.

Suggested Citation

  • Michalski, Tomasz, 2012. "Input substitutability, trade costs and location," Economics Letters, Elsevier, vol. 117(1), pages 57-59.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:57-59
    DOI: 10.1016/j.econlet.2012.04.105
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    References listed on IDEAS

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    1. Alan V. Deardorff, 2014. "Local comparative advantage: Trade costs and the pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 9-35, March.
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    4. Acemoglu, Daron & Gancia, Gino & Zilibotti, Fabrizio, 2012. "Competing engines of growth: Innovation and standardization," Journal of Economic Theory, Elsevier, vol. 147(2), pages 570-601.3.
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    6. Achilladelis, Basil & Antonakis, Nicholas, 2001. "The dynamics of technological innovation: the case of the pharmaceutical industry," Research Policy, Elsevier, vol. 30(4), pages 535-588, April.
    7. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
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    More about this item

    Keywords

    Input substitutability; Trade costs; North–South trade; Location;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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