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Comparative Advantage in Digital Trade

Author

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  • Alan V. Deardorff

    (University of Michigan)

Abstract

Digital trade takes a variety of forms, several of which are examined here with regard to whether they can be explained by comparative advantage. The five forms of digital trade considered are 1) physical products that are advertised, ordered, and/or paid for digitally, but transported by normal trade means; 2) digital products (music, movies, books, software) that are transmitted to purchasers via the internet and are most likely to be marketed and paid for via that as well; 3) services that are provided remotely by digital means; 4) data storage and computer applications accessible in the ÒcloudÓ; and 5) web platforms that serve an international audience and are supported by advertising. I argue that the first three of these can be well explained by comparative advantage, but there are problems with the last two.

Suggested Citation

  • Alan V. Deardorff, 2017. "Comparative Advantage in Digital Trade," Working Papers 664, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:664
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    File URL: http://www.fordschool.umich.edu/rsie/workingpapers/Papers651-675/r663.pdf
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    References listed on IDEAS

    as
    1. Anderson, James E. & Neary, J. Peter, 2007. "Welfare versus market access: The implications of tariff structure for tariff reform," Journal of International Economics, Elsevier, vol. 71(1), pages 187-205, March.
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    JEL classification:

    • F1 - International Economics - - Trade
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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