A direct comparison is made between two models of intra-industry trade: the love-of-varieties model and the Armington model. The former is a textbook model that is theoretically appealing, but seldom used in applied studies of trade policy. The latter has been widely used in CGE modelling, but is barely mentioned in textbooks. We find that what really differentiates the two models empirically is not the incorporation of increasing returns and monopolistic competition, but the elasticity of substitution between domestic and foreign differentiated products. The Armington model with an infinite elasticity of substitution can mimic the love-of-varieties model.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 11 (2002) Issue (Month): 4 (December) Pages: 405-427 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: