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 and Finance in its series Working Papers with number 201101.
Length: 30 pages
Date of creation: 20 Jan 2011
Date of revision:
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Postal: 3565 Old Main Hill, Logan, UT 84322-3565
Web page: http://huntsman.usu.edu/economicsandfinance/
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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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- 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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