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Generalized separability and the gains from trade

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  • Fally, Thibault

Abstract

This note examines the gains from trade under a flexible demand system that encompasses three types of demand often imposed (cases of homothetic, directly-separable and indirectly-separable preferences), while retaining the property that prices can be summarized by a single aggregator. Combined with monopolistic competition and Pareto distributions of marginal costs on the supply side, this demand system yields more flexible responses of prices to income and trade, and a wider range of predictions for the gains from trade.

Suggested Citation

  • Fally, Thibault, 2019. "Generalized separability and the gains from trade," Economics Letters, Elsevier, vol. 178(C), pages 8-12.
    • Handle: RePEc:eee:ecolet:v:178:y:2019:i:c:p:8-12
    DOI: 10.1016/j.econlet.2019.02.005
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    References listed on IDEAS

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    Cited by:

    1. Badis Tabarki, 2020. "International Trade under Monopolistic Competition beyond the CES," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02966937, HAL.
    2. Badis Tabarki, 2020. "International Trade under Monopolistic Competition beyond the CES," Post-Print halshs-02966937, HAL.
    3. Martin Alfaro, 2022. "The microeconomics of new trade models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(3), pages 1539-1565, August.
    4. Fally, Thibault, 2022. "Generalized separability and integrability: Consumer demand with a price aggregator," Journal of Economic Theory, Elsevier, vol. 203(C).
    5. Alfaro, Martin & Warzynski, Frederic, 2021. "Trade liberalization with granular firms," Economic Modelling, Elsevier, vol. 105(C).
    6. Badis Tabarki, 2020. "International Trade under Monopolistic Competition beyond the CES," Documents de travail du Centre d'Economie de la Sorbonne 20018, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    7. Yuichiro Matsumoto, 2019. "Firm Size Distribution and Variable Elasticity of Demand," Discussion Papers in Economics and Business 19-02, Osaka University, Graduate School of Economics.

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    More about this item

    Keywords

    Gains from trade; Gravity; Generalized separability; Single aggregator; Non-homothetic preferences;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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