Gains from Trade and Fragmentation
AbstractThis paper discusses the welfare effects, on groups, countries, and the world, of fragmentation. Fragmentation here is defined as the introduction of a technology that permits a production process to be split into separate parts, with the fragments able to be done in different locations. Standard results of trade theory and the gains from trade are then examined to see what they suggest about the gains from fragmentation. The main points made are, first, that it is easy to find examples in which fragmentation hurts particular groups and countries, and even in some circumstances the world. But I also argue that fragmentation is likely to increase world income overall, and therefore that it is likely to be beneficial on average. Based on that, together with our general ignorance of what the more specific effects of fragmentation are likely to be, we should resist attempts to use policies to interfere with it.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 543.
Length: 24 pages
Date of creation: 2005
Date of revision:
Find related papers by JEL classification:
- F1 - International Economics - - Trade
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deardorff, A.V., 1998.
"Fragmentation in Simple Trade Models,"
422, Research Seminar in International Economics, University of Michigan.
- Deardorff, Alan V., 2001. "Fragmentation in simple trade models," The North American Journal of Economics and Finance, Elsevier, vol. 12(2), pages 121-137, July.
- Brown, D.K. & Deardorff, A.V. & Stern, R.M., 1993. "Protection and Real Wages: Old and New Trade Theories and Their Empirical Conterparts," Working Papers 331, Research Seminar in International Economics, University of Michigan.
- Carsten Kowalczyk, 1992. "Paradoxes in integration theory," Open Economies Review, Springer, vol. 3(1), pages 51-59, February.
- James Markusen, 2005.
"Modeling the Offshoring of White-Collar Services: From Comparative Advantage to the New Theories of Trade and FDI,"
NBER Working Papers
11827, National Bureau of Economic Research, Inc.
- Markusen, James R., 2005. "Modeling the Offshoring of White-Collar Services: From Comparative Advantage to the New Theories of Trade and FDI," CEPR Discussion Papers 5408, C.E.P.R. Discussion Papers.
- Deardorff, A.V., 1998.
"Fragmentation Across Cones,"
98-14, Michigan - Center for Research on Economic & Social Theory.
- Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
- Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
- Dean, Judith M. & Lovely, Mary E. & Mora, Jesse, 2009. "Decomposing China-Japan-U.S. trade: Vertical specialization, ownership, and organizational form," Journal of Asian Economics, Elsevier, vol. 20(6), pages 596-610, November.
- Jung J. & Mercenier J., 2008.
"A Simple Model of Offshore Outsourcing,Technology Upgrading and Welfare,"
Working Papers ERMES
0808, ERMES, University Paris 2.
- Jae-won Jung & Jean Mercenier, 2008. "A Simple Model of Offshore Outsourcing,Technology Upgrading and Welfare," THEMA Working Papers 2008-21, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- repec:hal:gmonwp:halshs-00967369 is not listed on IDEAS
- Jaewon Jung & Jean Mercenier, 2014. "A Simple Model of Offshore Outsourcing, Technology Upgrading and Welfare," Working Papers halshs-00967369, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (FSPP Webmaster).
If references are entirely missing, you can add them using this form.