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Preferences, Country Bias, and International Trade

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  • Roy, Santanu
  • Viaene, Jean-Marie

Abstract

The paper analyzes international trade in a Ricardian world where consumer preferences exhibit country bias. In particular, consumers differentiate between identical physical goods by country of manufacture. In contrast to the classical Ricardian model, the pattern of international specialization in production depends on the preference structure. Possible equilibrium configurations include ones where both countries specialize incompletely and trade in both commodities, as well as situations where the pattern of specialization and trade is the reverse of that in the classical Ricardian world. Both interindustry and intraindustry trade can occur simultaneously, though there are no market imperfections or scale economies. Copyright 1998 by Blackwell Publishing Ltd.

Suggested Citation

  • Roy, Santanu & Viaene, Jean-Marie, 1998. "Preferences, Country Bias, and International Trade," Review of International Economics, Wiley Blackwell, vol. 6(2), pages 204-219, May.
  • Handle: RePEc:bla:reviec:v:6:y:1998:i:2:p:204-19
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    References listed on IDEAS

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    1. Alan Woodland & Kishti Sen, 2010. "The volatility of Australian traded goods' prices," Applied Economics, Taylor & Francis Journals, vol. 42(30), pages 3849-3869.
    2. Elie Appelbaum & Alan D. Woodland, 2010. "The Effects of Foreign Price Uncertainty on Australian Production and Trade," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 162-177, June.
    3. Stuart Glosser & Lonnie Golden, 2005. "Is labour becoming more or less flexible? Changing dynamic behaviour and asymmetries of labour input in US manufacturing," Cambridge Journal of Economics, Oxford University Press, vol. 29(4), pages 535-557, July.
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    Cited by:

    1. Michael J. Dueker & Andreas M. Fischer, 2001. "The mechanics of a successful exchange rate peg: lessons for emerging markets," Review, Federal Reserve Bank of St. Louis, pages 47-56.
    2. Toru Kikuchi, 2010. "A simple model of foreign brand penetration under monopolistic competition," Journal of Economics, Springer, pages 235-245.
    3. Toru Kikuchi, 2010. "A simple model of foreign brand penetration under monopolistic competition," Journal of Economics, Springer, pages 235-245.
    4. Busse, Matthias, 2002. "Competition intensity, potential competition and transaction cost economics," HWWA Discussion Papers 183, Hamburg Institute of International Economics (HWWA).
    5. Busse, Matthias, 2001. "Transaktionskosten und Wettbewerbspolitik," HWWA Discussion Papers 116, Hamburg Institute of International Economics (HWWA).
    6. Miller, Andrew D. & Langley, Suchada V. & Chambers, William, 2003. "Current Issues Affecting Trade And Trade Policy: An Annotated Literature Review," Working Papers 14606, International Agricultural Trade Research Consortium.

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