Monopolistic Competition and North-South Trade
AbstractWe examine the consequences of opening to international trade for a developing economy with open urban unemployment and rural-urban migration, where the urban sector is monopolistically competitive. We show that there exists a threshold level of urbanization prior to which increases in product variety will be reflected in increased urban unemployment, that opening to intra-industry trade with a high-wage economy (i.e., North-South trade) will reduce the rate of urban unemployment by a greater amount than intra-industry trade with a similar economy, and that trade intervention in the South may lower welfare by reducing varieties produced in the North.
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Bibliographic InfoPaper provided by Utah State University, Department of Economics in its series Working Papers with number 2011-01.
Length: 30 pages
Date of creation: 20 Jan 2011
Date of revision:
Trade and monopolistic competition; Urban unemployment; North-South trade;
Other versions of this item:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
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- Ko, Chia Chiun & Frijters, Paul, 2014.
"When Banana Import Restrictions Lead to Exports: A Tale of Cyclones and Quarantine Policies,"
IZA Discussion Papers
7988, Institute for the Study of Labor (IZA).
- Chia Chiun Ko & Paul Frijters, 2014. "When Banana Import Restrictions Lead to Exports: A Tale of Cyclones and Quarantine Policies," Discussion Papers Series 502, School of Economics, University of Queensland, Australia.
- Beladi, Hamid & Chao, Chi-Chur & Hollas, Daniel, 2013. "How growing asset inequality affects developing economies," Journal of Economics and Business, Elsevier, vol. 68(C), pages 43-51.
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