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Standardization of intermediate goods and international trade

Author

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  • Oliver Lorz
  • Matthias Wrede

Abstract

This paper analyzes the relationship between standardization of intermediate inputs and international trade. We employ a two-country, general equilibrium model with differentiated manufacturing goods. Production of manufacturing goods requires specific intermediate inputs, which can be either specialized or standardized. Standardization and the pattern of trade are determined endogenously in our model. In this framework we derive the effects of trade integration, that is, a decline in trading costs for intermediate goods, on the equilibrium outcome.

Suggested Citation

  • Oliver Lorz & Matthias Wrede, 2008. "Standardization of intermediate goods and international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 517-536, May.
    • Handle: RePEc:cje:issued:v:41:y:2008:i:2:p:517-536
    DOI: 10.1111/j.1540-5982.2008.00473.x
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    Cited by:

    1. Bauer, Christian J. & Langenmayr, Dominika, 2013. "Sorting into outsourcing: Are profits taxed at a gorilla's arm's length?," Journal of International Economics, Elsevier, vol. 90(2), pages 326-336.
    2. José Pontes, 2007. "Networks and firm location," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(4), pages 897-909, December.
    3. Carsten Eckel, 2009. "International trade, flexible manufacturing, and outsourcing," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1449-1472, November.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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