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Entry assumptions and welfare gains from trade

Author

Listed:
  • Nguyen, Hang T.
  • Timoshenko, Olga A.

Abstract

When productivities are not Pareto distributed, welfare gains from trade are not necessarily isomorphic between entry assumptions. Under exogenous entry, the extra adjustment in dividends dampens the relative increase in real wage as trade costs decline, resulting in lower welfare gains than under free entry.

Suggested Citation

  • Nguyen, Hang T. & Timoshenko, Olga A., 2017. "Entry assumptions and welfare gains from trade," Economics Letters, Elsevier, vol. 159(C), pages 104-107.
    • Handle: RePEc:eee:ecolet:v:159:y:2017:i:c:p:104-107
    DOI: 10.1016/j.econlet.2017.07.009
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    References listed on IDEAS

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    1. Marc J. Melitz & Stephen J. Redding, 2015. "New Trade Models, New Welfare Implications," American Economic Review, American Economic Association, vol. 105(3), pages 1105-1146, March.
    2. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    3. Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
    4. repec:spo:wpmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
    5. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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    JEL classification:

    • F1 - International Economics - - Trade

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