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Globalization and specialization

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  • Eckel, Carsten

Abstract

The popular Dixit-Stiglitz-Ethier framework proposes that globalization increases the menu of intermediate goods available to downstream firms and that gains from specialization raise welfare unambiguously. This study shows that both results depend critically on the assumption that demand elasticities are invariable. The more general framework presented here provides two main insights: First, whether specialization rises or falls depends ultimately on the shape of the cost function, and second, globalization can actually reduce welfare in the case when specialization falls.

Suggested Citation

  • Eckel, Carsten, 2008. "Globalization and specialization," Journal of International Economics, Elsevier, vol. 75(1), pages 219-228, May.
    • Handle: RePEc:eee:inecon:v:75:y:2008:i:1:p:219-228
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    References listed on IDEAS

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    Cited by:

    1. Rabah Amir & Jim Y. Jin & Michael Troge, 2015. "Free Trade vs. Autarky under Asymmetric Cournot Oligopoly," Discussion Paper Series, School of Economics and Finance 201509, School of Economics and Finance, University of St Andrews.
    2. Epifani, Paolo & Gancia, Gino, 2011. "Trade, markup heterogeneity and misallocations," Journal of International Economics, Elsevier, vol. 83(1), pages 1-13, January.
    3. Cheng-Te Lee & Deng-Shing Huang, 2017. "Asymmetric Globalization and Specialization," IEAS Working Paper : academic research 17-A004, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    4. Anu Kovarikova Arro, 2005. "Globalization, Increasing Returns in Component Production, and the Pattern of Trade," CERGE-EI Working Papers wp265, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    5. repec:bla:reviec:v:25:y:2017:i:1:p:98-107 is not listed on IDEAS
    6. Ari Van Assche, 2006. "Modularity and the Organization of International Production," CIRANO Working Papers 2006s-09, CIRANO.
    7. Bos Jaap W.B. & Economidou Claire & Zhang Lu, 2011. "Specialization in the Presence of Trade and Financial Integration: Explorations of the Integration-Specialization Nexus," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    8. repec:eee:reecon:v:71:y:2017:i:4:p:653-662 is not listed on IDEAS
    9. Grazia Calabrò & Simone Vieri, 2015. "Political Actions Oriented to Territorial Development: The Multifunctional Role of Agriculture," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(Special 9), pages 1346-1346, November.

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