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International Trade and Retailing

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  • Carsten Eckel

Abstract

The New Trade Theory predicts that international trade lowers prices for consumers and expands the choices available to them. This study shows that both predictions may no longer hold once adjustments in the retail sector are taken into account. I present a new model of retailing in general equilibrium and explore its implications for a number of different shocks. The results demonstrate that retail assortments may remain constant if consumers have a low preference for diversity, and that consumer prices can even rise if the retail density is sufficiently low.

Suggested Citation

  • Carsten Eckel, 2009. "International Trade and Retailing," CESifo Working Paper Series 2597, CESifo.
    • Handle: RePEc:ces:ceswps:_2597
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    More about this item

    Keywords

    international trade; retailing; diversity; market structure; welfare; monopolistic competition;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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