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Input substitutability, trade costs and the product cycle

Author

Listed:
  • Tomasz Michalski

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

I exhibit a simple and realistic feature of technology and trade costs that influences the partition of manufacturing between the North and South depending on the degree of substitutability of internationally traded inputs in production. In the presence of higher wages in the North, when production of manufacturing goods requires tradeable, country-specic Ricardian inputs,goods with a low elasticity of substitution between inputs in production will have lower costs of manufacturing in the North and those with a high elasticity in the South.

Suggested Citation

  • Tomasz Michalski, 2011. "Input substitutability, trade costs and the product cycle," Working Papers hal-00579392, HAL.
    • Handle: RePEc:hal:wpaper:hal-00579392
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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