Pattern of Trade and Economic Development in the Model of Monopolistic Competition
AbstractThe paper introduces differences in production and transaction conditions between countries into the model of monopolistic competition to investigate the interplay between trade policies and development strategies. It applies inframarginal analysis, which is total benefit analysis between corner solutions in addition to marginal analysis of each corner solution, to show that as transaction conditions are improved, the general equilibrium may discontinuously jump across different patterns of trade and economic development. It compares the marginal and inframarginal comparative statics of equilibrium in the model of monopolistic competition with the core theorems in the neoclassical trade models and with conventional wisdom in development economics. It shows that as analytical framework is altered, the meanings of concepts and related empirical observations will be changed too.
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Bibliographic InfoPaper provided by Chicago - Graduate School of Business in its series Papers with number 14.
Length: 29 pages
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF CHICAGO, H.G.B. ALEXANDER FOUNDATION GRADUATE SCHOOL OF BUSINESS, CHICAGO ILLINOIS 60637 U.S.A.
Web page: http://gsb.uchicago.edu/
More information through EDIRC
TRADE ; ECONOMIC DEVELOPMENT ; INCOME DISTRIBUTION;
Other versions of this item:
- Jeffrey D. Sachs & Xiaokai Yang & Dingsheng Zhang, 1999. "Pattern of Trade and Economic Development in the Model of Monopolistic Competition," CID Working Papers 14, Center for International Development at Harvard University.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
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