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Standardization of intermediate goods and international trade

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  • Oliver Lorz
  • Matthias Wrede

Abstract

. This paper analyzes the relationship between standardization of intermediate inputs and international trade. We employ a two‐country, general equilibrium model with differentiated manufacturing goods. Production of manufacturing goods requires specific intermediate inputs, which can be either specialized or standardized. Standardization and the pattern of trade are determined endogenously in our model. In this framework we derive the effects of trade integration, that is, a decline in trading costs for intermediate goods, on the equilibrium outcome. Ce mémoire analyse la relation entre la standardisation des intrants intermédiaires et le commerce international. On emploie un modèle d'équilibre général pour deux pays avec des biens manufacturés différenciés. La production des biens manufacturiers requiert des intrants intermédiaires spécifiques qui peuvent être spécialisés ou standardisés. La standardisation et le pattern du commerce sont déterminés de façon endogène dans le modèle. Dans ce cadre d'analyse, on dérive les effets de l'intégration commerciale, i.e. un déclin dans les coûts de transaction pour les biens intermédiaires, sur l'équilibre général.

Suggested Citation

  • Oliver Lorz & Matthias Wrede, 2008. "Standardization of intermediate goods and international trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 517-536, May.
  • Handle: RePEc:wly:canjec:v:41:y:2008:i:2:p:517-536
    DOI: 10.1111/j.1540-5982.2008.00473.x
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    Cited by:

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    3. Carsten Eckel, 2009. "International trade, flexible manufacturing, and outsourcing," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1449-1472, November.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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