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International Trade in Variety and Domestic Production

Author

Listed:
  • Lewrick, Ulf
  • Mohler, Lukas
  • Weder, Rolf

    (University of Basel)

Abstract

Welfare gains from increasing product variety are an important source of the gains from international trade. Recent empirical studies have largely focused on measuring the gains from an increased variety of imports. Trade theory, however, suggests that international trade heavily affects the variety of domestically produced goods as well. To overcome the typical data limitations on domestic varieties, we employ the number of domestic establishments as a proxy of the number of domestic varieties and include information on business dynamics to assess the importance of new and disappearing varieties. Our results suggest that for U.S. manufacturing, losses in domestic varieties from 1992 to 2006 are substantial and outweigh the gains from increased imported varieties.

Suggested Citation

  • Lewrick, Ulf & Mohler, Lukas & Weder, Rolf, 2011. "International Trade in Variety and Domestic Production," Working papers 2011/03, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2011/03
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    References listed on IDEAS

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    Cited by:

    1. João Barata R. B. Barroso, 2013. "Does trade shrink the measure of domestic firms?," Working Papers Series 332, Central Bank of Brazil, Research Department.

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    More about this item

    Keywords

    Variety gains; margins of trade; lambda ratio; U.S. manufacturing;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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