IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/0794.html
   My bibliography  Save this paper

Trade and Protection with Multistage Production

Author

Listed:
  • Avinash K. Dixit
  • Gene M. Grossman

Abstract

This paper analyzes trade in manufactured goods that are produced via a vertical production structure with many stages, where some value is added at each to an intermediate product to yield a good-in-process ready for the next stage. We consider the stage at which a good is traded to be an economically endogenous variable, with comparative advantage determining the pattern of production specialization by stages across countries. We study how endowment changes and policy shifts move the margin of comparative advantage, which thus provides a channel for resource allocation adjustment that is additional to the usual ones of factor substitution and changes in the quantity of output.

Suggested Citation

  • Avinash K. Dixit & Gene M. Grossman, 1981. "Trade and Protection with Multistage Production," NBER Working Papers 0794, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0794
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w0794.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
    2. Rudiger Dornbusch & Stanley Fischer & Paul A. Samuelson, 1980. "Heckscher-Ohlin Trade Theory with a Continuum of Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 95(2), pages 203-224.
    3. Bela Balassa, 1965. "Tariff Protection in Industrial Countries: An Evaluation," Journal of Political Economy, University of Chicago Press, vol. 73, pages 573-573.
    4. Bhagwati, Jagdish N. & Srinivasan, T. N., 1973. "The general equilibrium theory of effective protection and resource allocation," Journal of International Economics, Elsevier, vol. 3(3), pages 259-281, August.
    5. Falvey, Rodney E., 1981. "Commercial policy and intra-industry trade," Journal of International Economics, Elsevier, vol. 11(4), pages 495-511, November.
    6. Robert D. Waene, 1971. "Intermediate Goods in International Trade with Variable Proportions and Two Primary Inputs," The Quarterly Journal of Economics, Oxford University Press, vol. 85(2), pages 225-236.
    7. W. M. Corden, 1966. "The Structure of a Tariff System and the Effective Protective Rate," Journal of Political Economy, University of Chicago Press, vol. 74, pages 221-221.
    8. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    9. Woodland, A D, 1977. "Joint Outputs, Intermediate Inputs and International Trade Theory," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 517-533, October.
    10. Gene M. Grossman, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 96(4), pages 583-603.
    11. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    12. Pack, Howard, 1976. "The Substitution of Labour for Capital in Kenyan Manufacturing," Economic Journal, Royal Economic Society, vol. 86(341), pages 45-58, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert Stehrer, 2010. "The effects of factor and sector biased technical change revisited," Economic Change and Restructuring, Springer, vol. 43(1), pages 65-94, February.
    2. Kanika Pathania & Aditya Bhattacharjea, 2020. "Inverted Duty Structures and the Paradox of Negative Effective Protection in India, 2000–2014," Foreign Trade Review, , vol. 55(2), pages 139-167, May.
    3. L. P. Mahe & J. Courgeon, 1986. "Distorsions de concurrence dues à la PAC. Protection effective sur le porc et l'aviculture en RFA, France, Pays-Bas, Danemark," Économie rurale, Programme National Persée, vol. 173(1), pages 37-47.
    4. Bo Chen & Hong Ma & David S. Jacks, 2017. "Revisiting the Effective Rate of Protection in the Late Stages of Chinese Industrialisation," The World Economy, Wiley Blackwell, vol. 40(2), pages 424-438, February.
    5. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    6. Lionel Fontagné, 1991. "Spécialisation et protection en présence de biens intermédiaires échangés," Revue Économique, Programme National Persée, vol. 42(1), pages 51-74.
    7. Fuller, Frank Harland, 1996. "The location of marginal production for value-added and intermediate goods: optimal policies and trade volumes," ISU General Staff Papers 1996010108000012147, Iowa State University, Department of Economics.
    8. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank Group, vol. 32(1), pages 163-182.
    9. Nakakuki, Masayuki & Otani, Akira & Shiratsuka, Shigenori, 2004. "Distortions in Factor Markets and Structural Adjustments in the Economy," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 22(2), pages 71-99, May.
    10. Andrei A Levchenko & Jing Zhang, 2013. "The Global Labor Market Impact of Emerging Giants: A Quantitative Assessment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 479-519, August.
    11. Jim Malley & Thomas Moutos, 2002. "Vertical product differentiation and the import demand function: theory and evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(2), pages 257-281, May.
    12. Paul R. Bergin & Reuven Glick, 2003. "Endogenous Tradability and Macroeconomic Implications," NBER Working Papers 9739, National Bureau of Economic Research, Inc.
    13. David Hummels & Chong Xiang & Yo Chul Choi, 2010. "Explaining Import Variety and Quality: the Role of the Income Distribution," LIS Working papers 541, LIS Cross-National Data Center in Luxembourg.
    14. Yilmazkuday, Hakan, 2009. "Distribution of Consumption, Production and Trade within the U.S," MPRA Paper 16361, University Library of Munich, Germany.
    15. Brati Sankar Chakraborty, 2009. "Protection And Real Rewards: Some Antinomies," Pacific Economic Review, Wiley Blackwell, vol. 14(1), pages 56-70, February.
    16. T. Paul Schultz, 2006. "Does the Liberalization of Trade Advance Gender Equality in Schooling and Health?," Working Papers 935, Economic Growth Center, Yale University.
    17. Ernesto Dal Bó & Pedro Dal Bó, 2011. "Workers, Warriors, And Criminals: Social Conflict In General Equilibrium," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 646-677, August.
    18. Beladi, Hamid & Oladi, Reza, 2011. "An elementary proposition on technical progress and non-traded goods," Journal of Mathematical Economics, Elsevier, vol. 47(1), pages 68-71, January.
    19. Zhaohui Niu & Chang Liu & Saileshsingh Gunessee & Chris Milner, 2018. "Non-tariff and overall protection: evidence across countries and over time," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(4), pages 675-703, November.
    20. Waschik, Robert & Fraser, Iain, 2007. "A computable general equilibrium analysis of export taxes in the Australian wool industry," Economic Modelling, Elsevier, vol. 24(4), pages 712-736, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0794. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.