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Attitudes towards foreign products and welfare with capital mobility

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  • J.M. Callois

    (METAFORT - Mutations des activités, des espaces et des formes d'organisation dans les territoires ruraux - CEMAGREF-UR MECF - INRA : UMR1273 - Ecole Nationale du Génie Rural des Eaux et Forêts - ENITA Clermont)

  • C. Gaigné

    (Structures et Marché Agricoles, Ressources et Territoires - INRA - Agrocampus Ouest)

Abstract

We develop a model of trade with imperfect competition to study the welfare implications in developing and developed countries of the asymmetry in attitudes towards foreign products. In the developed country, consumers benefit from a better perception of foreign products while the rental rate of capital declines as long as the location of capital remains unchanged. However, when capital is mobile, the developing country hosts more and more capital at the expense of the developed country as perception of varieties produced in the developed country improves and the surplus of consumers in the developed country can decrease.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number hal-00546541.

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Date of creation: 2010
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Publication status: Published, Open Economies Review, 2010, 21, 5, 26 p.
Handle: RePEc:hal:journl:hal-00546541

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Keywords: ECONOMIE; MODELE; CONSOMMATEUR; CAPITAL; PERCEPTION SOCIALE; CAPITAL LOCATION; CONSUMER'S SURPLUS; PRODUCT OF ORIGIN; PRODUIT D'ORIGINE;

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  1. Matthieu Crozet & Hélène Erkel-Rousse, 2004. "Trade Performances, Product Quality Perceptions, and the Estimation of Trade Price Elasticities," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 108-129, 02.
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  7. Verlegh, Peeter W. J. & Steenkamp, Jan-Benedict E. M., 1999. "A review and meta-analysis of country-of-origin research," Journal of Economic Psychology, Elsevier, vol. 20(5), pages 521-546, October.
  8. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
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