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Trade costs, wage rates, technologies, and reverse imports

Author

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  • Jota Ishikawa
  • Yoshimasa Komoriya

Abstract

This paper explores the effects of transport costs, tariffs, and foreign wage rates on the domestic economy in the presence of reverse imports, with special emphasis on inter-firm cost asymmetry in an international oligopoly model. To serve the domestic market, a foreign firm produces in the foreign country, while two domestic firms produce either at home or abroad. Surprisingly, an increase in the foreign wage rate may increase the profits of a firm producing in the foreign country. Even if all firms produce in the foreign country, an increase in the foreign wage rate may improve domestic welfare.

Suggested Citation

  • Jota Ishikawa & Yoshimasa Komoriya, 2009. "Trade costs, wage rates, technologies, and reverse imports," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 615-638, May.
  • Handle: RePEc:cje:issued:v:42:y:2009:i:2:p:615-638
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    1. repec:bla:reviec:v:25:y:2017:i:4:p:733-759 is not listed on IDEAS

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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