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Inefficient Trade Patterns: Excessive Trade, Cross-Hauling, and Dumping

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  • Benjamin Eden

    ()
    (Department of Economics, Vanderbilt University and The University of Haifa)

Abstract

I study an example of a competitive environment in which trade occurs in a sequential manner. In this example, a country with a stable demand may suffer from trade with a country with unstable demand, there may be too much trade, a country may import and export the same good in the same period (cross-hauling) and dumping may occur. The assumption about the timing of delivery is critical for our results. When delivery occurs before trade (delivery to stocks) trade improves welfare, there is dumping but no cross-hauling. When delivery occurs after trade (delivery to order), trade may reduce welfare, cross-hauling may occur but dumping does not occur.

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File URL: http://www.accessecon.com/pubs/VUECON/vu05-w03.pdf
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0503.

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Date of creation: Feb 2005
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Handle: RePEc:van:wpaper:0503

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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Keywords: Cross-hauling; dumping; excessive trade; sequential trade;

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  12. Benjamin Eden, 2006. "International Seigniorage Payments," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0622, Vanderbilt University Department of Economics.
  13. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 64, University of Warwick, Department of Economics.
  14. Deneckere, Raymond & Marvel, Howard P & Peck, James, 1996. "Demand Uncertainty, Inventories, and Resale Price Maintenance," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(3), pages 885-913, August.
  15. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262150476, December.
  16. Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, Elsevier, vol. 9(1), pages 1-24, February.
  17. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 34(2), pages 647-668, June.
  18. Mario J. Crucini & Chris I. Telmer & Marios Zachariadis, 2005. "Understanding European Real Exchange Rates," American Economic Review, American Economic Association, American Economic Association, vol. 95(3), pages 724-738, June.
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Cited by:
  1. Benjamin Eden, 2007. "Efficient Barriers to Trade: A Sequential Trade Model with Heterogeneous Agents," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0702, Vanderbilt University Department of Economics.

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