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Attitudes Towards Foreign Products and Welfare with Capital Mobility

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  • Jean-Marc Callois
  • Carl Gaigné

    ()

Abstract

We develop a model of trade with imperfect competition to study the welfare implications in developing and developed countries of the asymmetry in attitudes towards foreign products. In the developed country, consumers benefit from a better perception of foreign products while the rental rate of capital declines as long as the location of capital remains unchanged. However, when capital is mobile, the developing country hosts more and more capital at the expense of the developed country as perception of varieties produced in the developed country improves and the surplus of consumers in the developed country can decrease.

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File URL: http://hdl.handle.net/10.1007/s11079-009-9115-y
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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 21 (2010)
Issue (Month): 5 (November)
Pages: 751-770

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Handle: RePEc:kap:openec:v:21:y:2010:i:5:p:751-770

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Web page: http://www.springerlink.com/link.asp?id=100323

Related research

Keywords: Product of origin; Capital location; Consumer’s surplus; F12; F21;

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  1. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
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  3. Matthieu Crozet & Hélène Erkel-Rousse, 2004. "Trade Performances, Product Quality Perceptions, and the Estimation of Trade Price Elasticities," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 108-129, 02.
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  6. Verlegh, Peeter W. J. & Steenkamp, Jan-Benedict E. M., 1999. "A review and meta-analysis of country-of-origin research," Journal of Economic Psychology, Elsevier, vol. 20(5), pages 521-546, October.
  7. Gilles Grolleau & Tarik Lakhal & Naoufel Mzoughi, 2004. "Does Ethical Activism Lead to Firm Relocation?," Kyklos, Wiley Blackwell, vol. 57(3), pages 387-402, 08.
  8. NEVEN, Damien & NORMAN, George & THISSE, Jacques-François, . "Attitudes towards foreign products and international price competition," CORE Discussion Papers RP -948, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
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