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The Gains from Variety in the European Union

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  • Mohler, Lukas
  • Seitz, Michael

Abstract

Over the last decade, European Union members have experienced a dramatic increase in imports. This increase was accompanied by a strong growth in the number of imported goods and trading partners, indicating positive welfare gains for consumers via an extended set of consumption possibilities, as pointed out in the "New Trade Theory". In this paper, we apply the methodology developed by Feenstra (1994) and Broda and Weinstein (2006) to estimate structurally the gains from imported variety for the 27 countries of the European Union using highly disaggregated trade data at the HTS-8 level from Eurostat for the period of 1999 to 2008. Our results show that, within the European Union, especially “newer” and smaller member states exhibit high gains from newly imported varieties. Furthermore, we find that the vast majority of the gains from variety for consumers stem from intra-European Union trade.

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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 11477.

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Date of creation: Apr 2010
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Handle: RePEc:lmu:muenec:11477

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Keywords: European Union; Welfare Gains from Trade; Trade in Variety;

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Cited by:
  1. Corbo, Vesna & Osbat, Chiara, 2013. "Trade adjustment in the European Union - a structural estimation approach," Working Paper Series 1535, European Central Bank.
  2. Konstantins Benkovskis & Julia Woerz, 2012. "Evaluation of Non-price Competitiveness of Exports from Central, Eastern and Southeastern European Countries in the EU Market," Working Papers 2012/01, Latvijas Banka.
  3. Harald Badinger, 2012. "Die Auswirkungen des Euro auf den Außenhandel der EU und Österreichs," FIW Policy Brief series 015, FIW.
  4. Konstantins Benkovskis & Julia Wörz, 2011. "How Does Quality Impact on Import Prices?," Working Papers 175, Oesterreichische Nationalbank (Austrian Central Bank).

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