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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
    DOI: 10.1111/j.1540-5982.2009.01521.x
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    Cited by:

    1. KOMORIYA Yoshimasa, 2014. "How the Movement of Natural Persons Agreement Could Fuel FTAs," Discussion papers 14041, Research Institute of Economy, Trade and Industry (RIETI).
    2. Hiroshi Mukunoki, 2017. "The welfare effect of a free trade agreement in the presence of foreign direct investment and rules of origin," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 733-759, September.
    3. Arijit Mukherjee & Umut Erksan Senalp, 2021. "Firm‐productivity and cross border merger," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 838-859, September.
    4. Haitao CHENG & Jota ISHIKAWA, 2021. "Carbon Tax and Border Tax Adjustments with Technology and Location Choices," Discussion papers 21030, Research Institute of Economy, Trade and Industry (RIETI).
    5. Yan, Yan & Li, Yi, 2023. "Technology spillovers, strategic environmental policy, and foreign direct investment," Energy Economics, Elsevier, vol. 127(PA).

    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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