Advanced Search
MyIDEAS: Login

Taste Heterogeneity, Trade, and the Within-Industry Home Market Effect

Contents:

Author Info

  • Raphael A. Auer
Registered author(s):

    Abstract

    The classical Armington (1969) assumption that consumption is differentiated by the location of production is often needed to match aggregate trade patterns. Also more recent findings that there are pronounced systematic patterns in the quality composition of production, trade, and consumption or that intra-industry trade volume can best be explained by factors that are specific to country-pairs are not easily rationalized in frameworks based on the Dixit and Stiglitz preference framework. It is worthwhile to examine which underlying preference structure of rational agents can explain these patterns of trade and to then analyze how trade liberalization affects the aggregate economy once these preference are properly modeled. For example, as famously conjectured by Linder (1961), it is likely that "[t]he more similar is the demand structure of two countries, the more intensive, potentially, is the trade between these two countries". Implicit in Linder's hypothesis is the argument that domestic firms tend to produce goods that are optimized for the local taste and less for the taste of foreign consumers. Consequently, differences in the tastes and products impede trade and reduce the welfare gains from trade liberalization.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sjes.ch/papers/2009-IV-2.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

    Volume (Year): 145 (2009)
    Issue (Month): IV (December)
    Pages: 387-403

    as in new window
    Handle: RePEc:ses:arsjes:2009-iv-2

    Contact details of provider:
    Postal: c/o SNB/BNS, B├Ârsenstrasse 15, PO Box 2800, CH-8022 Z├╝rich
    Phone: +41 (0)44 631 32 34
    Fax: +41 (0)44 631 39 01
    Email:
    Web page: http://www.sjes.ch
    More information through EDIRC

    Related research

    Keywords: home-bias; within-industry trade; product heterogeneity;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ses:arsjes:2009-iv-2. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Steiner).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.