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An Elementary Theorem on Gains from Virtual Trade

Author

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  • Sugata Marjit
  • Lei Yang

Abstract

Virtual markets allow consumers to save time costs to purchase goods and services. Countries lose relative to the conventional welfare gain when they increase consumption of non-virtual goods under free trade. We include the classical gains from trade theorem as a special case. For two identical countries that have same endowment and technology, the income difference between them can generate trade when we consider the time cost of purchasing goods. The rich country exports the non-virtual good and imports the virtual good while the poor country exports the virtual good and imports the non-virtual good.

Suggested Citation

  • Sugata Marjit & Lei Yang, 2020. "An Elementary Theorem on Gains from Virtual Trade," CESifo Working Paper Series 8703, CESifo.
    • Handle: RePEc:ces:ceswps:_8703
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    References listed on IDEAS

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    Cited by:

    1. Marjit, Sugata & Das, Gouranga G., 2023. "Immunity-driven Comparative Advantage and its Palliative Effect on Social Health and Inequality: A Theoretical Perspective," GLO Discussion Paper Series 1252, Global Labor Organization (GLO).
    2. Sugata Marjit & Gouranga Gopal Das, 2022. "Immunity-Driven Comparative Advantage and Its Palliative Effect on Social Health and Inequality - A Theoretical Perspective," CESifo Working Paper Series 9569, CESifo.

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    More about this item

    Keywords

    virtual trade; time cost;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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