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Trade Patterns And Export Pricing Under Non-Ces Preferences

Author

Listed:
  • Sergey Kichko

    (National Research University Higher School of Economics)

  • Sergey Kokovin

    (National Research University Higher School of Economics)

  • Evgeny Zhelobodko

    (National Research University Higher School of Economics)

Abstract

We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of substitution. Firms' profits and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively abundant is a net exporter of the manufactured good, although both firm sizes and profits are lower in this country than in the country where capital is relatively scarce. The pricing policy adopted by firms neither depends on capital endowment nor country asymmetry. It is determined by the nature of preferences: when demand elasticity increases (decreases) with consumption, firms practice dumping (reverse-dumping)

Suggested Citation

  • Sergey Kichko & Sergey Kokovin & Evgeny Zhelobodko, 2014. "Trade Patterns And Export Pricing Under Non-Ces Preferences," HSE Working papers WP BRP 54/EC/2014, National Research University Higher School of Economics.
  • Handle: RePEc:hig:wpaper:54/ec/2014
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    Citations

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    Cited by:

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    2. Wang, Xichao & Gibson, Mark J., 2015. "Trade, non-homothetic preferences, and the impact of country size on wages," Economics Letters, Elsevier, vol. 132(C), pages 121-124.
    3. Behrens, Kristian & Zhelobodko, Evgeny & Pokrovsky, Dmitry, 2014. "Market Size, Entrepreneurship, and Income Inequality," CEPR Discussion Papers 9831, C.E.P.R. Discussion Papers.
    4. Kokovin, Sergey & Molchanov, Pavel & Bykadorov, Igor, 2022. "Increasing returns, monopolistic competition, and international trade: Revisiting gains from trade," Journal of International Economics, Elsevier, vol. 137(C).
    5. E. Weyl & Michal Fabinger, 2015. "A Tractable Approach to Pass-Through Patterns," 2015 Meeting Papers 747, Society for Economic Dynamics.
    6. A. Shapoval & V. M. Goncharenko, 2020. "Industry equilibrium and welfare in monopolistic competition under uncertainty," Journal of Economics, Springer, vol. 130(2), pages 187-218, July.
    7. Osharin Alexander & Verbus Valery, 2015. "Heterogeneous consumers and market structure in a monopolistically competitive setting," EERC Working Paper Series 15/03e, EERC Research Network, Russia and CIS.
    8. Vera Ivanova & Philip Ushchev, 2019. "Product Differentiation, Competitive Toughness, and Intertemporal Substitution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1244-1269, July.
    9. Daqing Yao & John Whalley, 2015. "Assessing the Effects of the MFA/ATC from US and World Trade Data after Its Removal," NBER Working Papers 21299, National Bureau of Economic Research, Inc.
    10. Kazunobu Hayakawa & Nuttawut Laksanapanyakul & Hiroshi Mukunoki & Shujiro Urata, 2016. "Impact of Free Trade Agreement Utilisation on Import Prices," Working Papers DP-2016-24, Economic Research Institute for ASEAN and East Asia (ERIA).
    11. Kristian Behrens & Sergey Kichko & Philip Ushchev & Sergei Kichko, 2018. "Intersectoral Markup Divergence," CESifo Working Paper Series 6965, CESifo.
    12. Alexander Osharin & Valery Verbus, 2018. "Heterogeneity of consumer preferences and trade patterns in a monopolistically competitive setting," Journal of Economics, Springer, vol. 125(3), pages 211-237, November.
    13. José M. Gaspar, 2018. "A prospective review on New Economic Geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 237-272, September.
    14. Dao‐Zhi Zeng & Shin‐Kun Peng, 2021. "Symmetric tax competition and welfare with footloose capital," Journal of Regional Science, Wiley Blackwell, vol. 61(2), pages 472-491, March.
    15. Sergei Kichko & Pierre M. Picard, 2023. "Market size, income heterogeneity, and trade," DEM Discussion Paper Series 23-11, Department of Economics at the University of Luxembourg.
    16. Alexander Osharin & Valery Verbus, 2016. "Heterogeneous consumers and trade patterns in a monopolistically competitive setting," HSE Working papers WP BRP 131/EC/2016, National Research University Higher School of Economics.

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    More about this item

    Keywords

    international trade; monopolistic competition; capital asymmetry; variable markups;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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