IDEAS home Printed from
   My bibliography  Save this article

Trade and Welfare Implications of Networks


  • V. Deardorff, Alan

    () (The University of Michigan)


This paper examines the effects on welfare and on patterns of trade of a reduction in costs of trading, such as might be the result of newly formed networks among residents of different countries with common culture or other ties. It argues that such a reduction in trade costs, even when it applies only to a particular bilateral trade route and may cause imports to be diverted from one source to another, must in the absence of distortions be welfare improving in the aggregate. On the other hand, such a change can indeed alter trade patterns distinctly, and they may also lower the welfare of particular countries. Examples are provided in which falling trade costs cause reversals of a country’s pattern of trade, and in which a country that becomes part of a trade-cost-reducing network that alters its trade loses as a result.

Suggested Citation

  • V. Deardorff, Alan, 2001. "Trade and Welfare Implications of Networks," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 485-499.
  • Handle: RePEc:ris:integr:0174

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Alan V. Deardorff, 2014. "Local comparative advantage: Trade costs and the pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 9-35, March.
    2. Aditya Rangga Yogatama & Fithra Faisal Hastiadi, 2015. "The Role of Democracy and Governance in the Enhancement of Indonesian Exports to the Organization of the Islamic Cooperation (OIC) Countries," Working Papers in Economics and Business 201504, Faculty of Economics and Business, University of Indonesia, revised Jul 2015.

    More about this item


    Gains from trade; Trade costs; Networks;

    JEL classification:

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


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:integr:0174. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jong-Eun Lee). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.