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Congestible communications networks and international trade

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  • Toru Kikuchi
  • Tetsuro Ichikawa

Abstract

We build a two-country model of monopolistic competition with communications networks. A communications network is characterized by (1) the existence of large fixed costs of network provision, and (2) the presence of congestion. It is demonstrated that both the size of a country and the relative magnitude of the congestion effect determine its comparative advantage: if the congestion effect (resp., the cost-sharing effect) prevails universally, a comparative advantage in the goods that require communications is held by the smaller (resp., larger) of the two countries.

Suggested Citation

  • Toru Kikuchi & Tetsuro Ichikawa, 2002. "Congestible communications networks and international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 331-340, May.
  • Handle: RePEc:cje:issued:v:35:y:2002:i:2:p:331-340
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    Citations

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    Cited by:

    1. Ashok S. Guha & Brishti Guha, 2009. "Trade, Growth, and Increasing Returns to Infrastructure: The Role of the Sophisticated Monopolist ," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 1053-1065, November.
    2. Toru Kikuchi & Chiharu Kobayashi, 2003. "Communications networks and virtual economic integration: The case of three countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(1), pages 1-6, February.
    3. Nguyen HIEP & Hiroshi OHTA, 2005. "Heterogeneity, Networks and International Trade under Monopolistic Competition," GSICS Working Paper Series 1, Graduate School of International Cooperation Studies, Kobe University.
    4. Jeon, Bang Nam & Tang, Linghui, 2005. "Information Technology and Bilateral FDI: Theory and Evidence," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 613-630.
    5. repec:ebl:ecbull:v:15:y:2007:i:5:p:1-9 is not listed on IDEAS
    6. repec:kap:iaecre:v:9:y:2003:i:1:p:1-6 is not listed on IDEAS
    7. Colin Davis, 2005. "Capital-Intensive Country-Specific Network Costs and Intra-Industry Trade," Economics Bulletin, AccessEcon, vol. 6(3), pages 1-9.
    8. Colin Davis, 2007. "Communication costs, network externalities, and long-run growth," Economics Bulletin, AccessEcon, vol. 15(5), pages 1-9.
    9. Nguyen Hiep & Hiroshi Ohta, 2007. "Efficiency in International Trade with Firm Heterogeneity and Networks," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 217-231, May.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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