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International Trade and Cultural Diversity: A Model of Preference Selection

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  • Vankatesh Bala
  • Ngo Van Long

Abstract

We consider the evolution of preferences when trade occurs between two countries. We show that if one country is much larger than the other, its preferences can eventually take over the preferences of the second country. This result may provide an explanation of why small countries sometimes exclude certain goods (especially those related to culture) from trade agreements. We also show that when the sensitivity of preferences to the relative price is high, the distribution of preferences can fluctuate cyclically over time.

Suggested Citation

  • Vankatesh Bala & Ngo Van Long, 2004. "International Trade and Cultural Diversity: A Model of Preference Selection," CESifo Working Paper Series 1242, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1242
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp1242.pdf
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    References listed on IDEAS

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    Cited by:

    1. Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2008. "Globalization and the dynamics of cultural identity," Journal of International Economics, Elsevier, vol. 76(2), pages 356-370, December.
    2. Maystre, Nicolas & Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2014. "Product-based cultural change: Is the village global?," Journal of International Economics, Elsevier, vol. 92(2), pages 212-230.

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    Keywords

    preferences; evolution; culture; replicator dynamics; international trade;

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