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Trade in variety and domestic production: Evidence from US manufacturing

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  • Ulf Lewrick
  • Lukas Mohler
  • Rolf Weder

Abstract

Welfare gains from increasing product variety are an important source of the gains from international trade. Previous empirical studies, however, typically focus on measuring gains from imported varieties. This paper introduces a measure to analyze changes in domestically produced varieties to estimate the total variety gains. Our analysis suggests that, for US manufacturing, losses in domestic varieties from 1992 to 2006 seem substantial given the large decline in the number of US establishments. Yet, once we account for the reallocation of resources towards large multi-variety firms, we find considerable domestic variety gains, adding to those from imported varieties.

Suggested Citation

  • Ulf Lewrick & Lukas Mohler & Rolf Weder, 2016. "Trade in variety and domestic production: Evidence from US manufacturing," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1631-1657, November.
    • Handle: RePEc:cje:issued:v:49:y:2016:i:4:p:1631-1657
    DOI: 10.1111/caje.12246
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    Cited by:

    1. Kancs, d'Artis & Persyn, Damiaan, 2019. "Welfare Gains from the Variety Growth," Working Papers 2019-01, Joint Research Centre, European Commission.

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    • F10 - International Economics - - Trade - - - General

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