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International Trade and Cultural Identity

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  • Eckhard Janeba

Abstract

Economists emphasize the benefits from free trade due to international specialization, but typically have a narrow measure of what matters to individuals. Critics of free trade, by contrast, focus on the pattern of consumption in society and the nature of goods being consumed, but often fail to take into account the gains from specialization. This paper develops a new framework to study the effects of trade liberalization on cultural identity, which emerges as the result of the interaction of individual consumption choices, similar to a network externality. In a Ricardian model of international trade the paper shows that (i) trade is not Pareto inferior to autarky if the free trade equilibrium is unique, (ii) trade is not Pareto superior to autarky if the world is culturally diverse under free trade, but can be if the world is culturally homogenous, (iii) and when multiple free trade equilibria exist everybody in a country can lose from free trade if that country is culturally homogenous under autarky. Consumers of imported cultural goods tend to gain, while consumers of exported cultural goods tend to lose from trade liberalization.

Suggested Citation

  • Eckhard Janeba, 2004. "International Trade and Cultural Identity," NBER Working Papers 10426, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10426
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    File URL: http://www.nber.org/papers/w10426.pdf
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    References listed on IDEAS

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    1. Segerstrom, Paul, 2003. "Naomi Klein and the Anti-Globalization Movement," CEPR Discussion Papers 4141, C.E.P.R. Discussion Papers.
    2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    3. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    4. Francois, Patrick & van Ypersele, Tanguy, 2002. "On the protection of cultural goods," Journal of International Economics, Elsevier, vol. 56(2), pages 359-369, March.
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    Citations

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    Cited by:

    1. Joshua Aizenman & Eileen Brooks, 2008. "Globalization and Taste Convergence: the Cases of Wine and Beer," Review of International Economics, Wiley Blackwell, vol. 16(2), pages 217-233, May.
    2. Steven M. Suranovic & Robert Winthrop, 2005. "Cultural Effects of Trade Liberalization," International Trade 0511003, EconWPA.
    3. James E. Rauch & Vitor Trindade, 2009. "Neckties in the tropics: a model of international trade and cultural diversity," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 809-843, August.
    4. Beaudreau, Bernard C., 2006. "Identity, entropy and culture," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 205-223, April.
    5. Disdier, Anne-Célia & Head, Keith & Mayer, Thierry, 2010. "Exposure to foreign media and changes in cultural traits: Evidence from naming patterns in France," Journal of International Economics, Elsevier, vol. 80(2), pages 226-238, March.
    6. Bala, Venkatesh & Van Long, Ngo, 2005. "International trade and cultural diversity with preference selection," European Journal of Political Economy, Elsevier, vol. 21(1), pages 143-162, March.
    7. Fernando Ferreira & Joel Waldfogel, 2010. "Pop Internationalism: Has A Half Century of World Music Trade Displaced Local Culture?," NBER Working Papers 15964, National Bureau of Economic Research, Inc.
    8. Joshua Frank, 2007. "Meat as a bad habit: A case for positive feedback in consumption preferences leading to lock-in," Review of Social Economy, Taylor & Francis Journals, vol. 65(3), pages 319-348.
    9. Carsten Eckel, 2006. "Trade and Diversity: Is There a Case for 'Cultural Protectionism?'," German Economic Review, Verein für Socialpolitik, vol. 7, pages 403-418, November.
    10. Maystre, Nicolas & Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2014. "Product-based cultural change: Is the village global?," Journal of International Economics, Elsevier, vol. 92(2), pages 212-230.
    11. Gordon H. Hanson & Chong Xiang, 2009. "International Trade in Motion Picture Services," NBER Chapters,in: International Trade in Services and Intangibles in the Era of Globalization, pages 203-222 National Bureau of Economic Research, Inc.
    12. Jingchen Jiang & Yanqing Jiang, 2015. "An analysis of the trade barriers to the Chinese cultural trade," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 5(4), pages 62-72, April.
    13. Vankatesh Bala & Ngo Van Long, 2004. "International Trade and Cultural Diversity: A Model of Preference Selection," CESifo Working Paper Series 1242, CESifo Group Munich.
    14. Olivier, Jacques & Thoenig, Mathias & Verdier, Thierry, 2008. "Globalization and the dynamics of cultural identity," Journal of International Economics, Elsevier, vol. 76(2), pages 356-370, December.
    15. Philipp Kolo, 2011. "Questioning Ethnic Fragmentation's Exogeneity - Drivers of Changing Ethnic Boundaries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 210, Ibero-America Institute for Economic Research.
    16. Janeba, Eckhard, 2007. "International trade and consumption network externalities," European Economic Review, Elsevier, vol. 51(4), pages 781-803, May.

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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