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International Trade in Variety and Domestic Production

  • Ulf Lewrick

    ()

  • Lukas Mohler

    ()

  • Rolf Weder

    (University of Basel)

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.

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Paper provided by Faculty of Business and Economics - University of Basel in its series Working papers with number 2011/03.

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Date of creation: 2011
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Handle: RePEc:bsl:wpaper:2011/03
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