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International Trade and Cultural Diversity: A Model of Preference Selection

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Author Info
Vankatesh Bala ()
Ngo Van Long ()

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Abstract

We consider the evolution of preferences when trade occurs between two countries. We show that if one country is much larger than the other, its preferences can eventually take over the preferences of the second country. This result may provide an explanation of why small countries sometimes exclude certain goods (especially those related to culture) from trade agreements. We also show that when the sensitivity of preferences to the relative price is high, the distribution of preferences can fluctuate cyclically over time.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1242.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1242

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Related research
Keywords: preferences; evolution; culture; replicator dynamics; international trade;

Find related papers by JEL classification:
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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    Other versions:
  7. Francois, Patrick & van Ypersele, Tanguy, 2002. "On the protection of cultural goods," Journal of International Economics, Elsevier, vol. 56(2), pages 359-369, March. [Downloadable!] (restricted)
  8. Bisin, A. & Verdier, T., 1999. "A model of cultural transmission, voting and political ideology," DELTA Working Papers 1999-13, DELTA (Ecole normale supérieure).
    Other versions:
  9. Pollak, Robert A, 1976. "Interdependent Preferences," American Economic Review, American Economic Association, vol. 66(3), pages 309-20, June.
  10. Karni, Edi & Schmeidler, David, 1990. "Fixed Preferences and Changing Tastes," American Economic Review, American Economic Association, vol. 80(2), pages 262-67, May. [Downloadable!] (restricted)
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    Other versions:
  12. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August. [Downloadable!] (restricted)
  13. Eckhard Janeba, 2004. "International Trade and Cultural Identity," NBER Working Papers 10426, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Mailath, George J., 1992. "Introduction: Symposium on evolutionary game theory," Journal of Economic Theory, Elsevier, vol. 57(2), pages 259-277, August. [Downloadable!] (restricted)
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    Other versions:
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