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Middlemen Margins And Globalization

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Author Info

  • Dilip Mookherjee

    ()
    (Department of Economics, Boston University)

  • Pranab Bardhan

    (Department of Economics, University of California, Berkeley)

  • Masatoshi Tsumagari

    ()
    (Department of Economics, Keio University)

Abstract

We provide a competitive theory of middlemen or entrepreneurs who develop brand-name reputations necessary to overcome product quality moral hazard problems, embedded in a Heckscher-Ohlin model of North-South trade. Agents with heterogeneous entrepreneurial abil- ities sort into different sectors and occupations, with endogenous inter- sectoral mobility. In some contexts competitive equilibrium is charac- terized by restricted inter-sectoral mobility; bene ts of trade liberal- ization in the South accrue disproportionately to middlemen, North- South factor price differences grow, and offshoring reduces inequality in the South. In other contexts there is enough mobility; classical Stolper-Samuelson and factor price equalization results hold.

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Bibliographic Info

Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2011-034.

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Length: 48 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:bos:wpaper:wp2011-034

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Related research

Keywords: middlemen; reputation; inequality; trade liberalization; North-South trade;

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References

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Citations

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Cited by:
  1. Marianna Belloc & Samuel Bowles, 2010. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," Levine's Working Paper Archive 661465000000000051, David K. Levine.

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