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Product Development and International Trade

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Author Info
Grossman, Gene M
Helpman, Elhanan

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Abstract

The authors develop a multicountry, dynamic general equilibrium model of product innovation and international trade to study the creation of comparative advantage through R$50D and the evolution of world trade over time. In their model, firms must incur resource costs to introduce new products, and forward-looking potential producers conduct R$50D and enter the product market whenever profit opportunities exist. Trade has both intraindustry and interindustry components, and the different incentives that face agents in different countries for investment and savings decisions give rise to intertemporal trade. The authors derive results on the dynamics of trade patterns and trade volume and on the temporal emergence of multinational corporations. Copyright 1989 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 97 (1989)
Issue (Month): 6 (December)
Pages: 1261-83
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Handle: RePEc:ucp:jpolec:v:97:y:1989:i:6:p:1261-83

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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.:
  1. Feenstra, Robert C & Judd, Kenneth L, 1982. "Tariffs, Technology Transfer, and Welfare," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1142-65, December. [Downloadable!] (restricted)
  2. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-85, May. [Downloadable!] (restricted)
  3. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February. [Downloadable!] (restricted)
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  5. Dollar, David, 1983. "Technological Innovation, Capital Mobility, and the Product Cycle in North-South Trade," Working Papers 83-31, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
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  6. Jensen, Richard & Thursby, Marie, 1987. "A Decision Theoretic Model of Innovation, Technology Transfer, and Trade," Review of Economic Studies, Blackwell Publishing, vol. 54(4), pages 631-47, October. [Downloadable!] (restricted)
  7. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. [Downloadable!] (restricted)
  8. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-71, June. [Downloadable!] (restricted)
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