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Heterogeneity, Networks and International Trade under Monopolistic Competition

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  • Nguyen HIEP
  • Hiroshi OHTA

Abstract

This paper examines integrated effects of firm heterogeneity and communication network services on international trade. Patterns and effects of trade are to be analyzed in a general equilibrium model where firms with different productivity levels share among them the cost of network services and compete in a monopolistically competitive market for a differentiated good. The paper reveals that the more efficient country in the differentiated good production is not always the net-exporter of the good. The less efficient country also has the chance to expand the industry and then to become the net-exporter in this intra-industry trade due to the combination of the efficiency effect induced by firm heterogeneity and the cost-sharing effect by the existence of the network service industry.

Suggested Citation

  • Nguyen HIEP & Hiroshi OHTA, 2005. "Heterogeneity, Networks and International Trade under Monopolistic Competition," GSICS Working Paper Series 1, Graduate School of International Cooperation Studies, Kobe University.
    • Handle: RePEc:kcs:wpaper:1
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    File URL: https://da.lib.kobe-u.ac.jp/da/kernel/80600001/
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    References listed on IDEAS

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    Cited by:

    1. Nguyen Hiep & Hiroshi Ohta, 2007. "Efficiency in International Trade with Firm Heterogeneity and Networks," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 217-231, May.

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