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On Types of Trade,Adjustment of Labor and Welfare Gains During Asymmetric Liberalizations

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  • Yener Kandogan

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Abstract

This paper modifies the two-industry, two-country Heckscher-Ohlin model with intermediate goods to decompose trade into its horizontal and vertical intra-industry, as well as inter-industry parts. Acknowledging that liberalization affects each type of trade differently, and that changes in each imply labor adjustment of different magnitudes, the paper analyzes the effects of widely observed asymmetries in liberalization policies. The paper concludes with the implications of the model for the liberalization between the East and the West through the Europe Agreements.

Suggested Citation

  • Yener Kandogan, 2003. "On Types of Trade,Adjustment of Labor and Welfare Gains During Asymmetric Liberalizations," William Davidson Institute Working Papers Series 2003-568, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2003-568
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    References listed on IDEAS

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    1. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    2. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    3. Cadot, Olivier & de Melo, Jaime, 1994. "France and the CEECs: Adjusting to Another Enlargement," CEPR Discussion Papers 1049, C.E.P.R. Discussion Papers.
    4. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
    5. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
    6. Matthew J. Slaughter, 1997. "International Trade and Labor-Demand Elasticities," NBER Working Papers 6262, National Bureau of Economic Research, Inc.
    7. Jolanta Dziembowska-Kowalska & Rolf H. Funck, 2000. "Cultural activities as a location factor in European competition between regions: Concepts and some evidence," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(1), pages 1-12.
    8. Brian L. Buhr & Hanho Kim, 1997. "Dynamic Adjustment in Vertically Linked Markets: The Case of the U.S. Beef Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 126-138.
    9. Natalia T. Tamirisa, 1999. "Exchange and Capital Controls as Barriers to Trade," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-4.
    10. Baldwin, Robert E. & Mutti, John H. & Richardson, J. David, 1980. "Welfare effects on the United States of a significant multilateral tariff reduction," Journal of International Economics, Elsevier, vol. 10(3), pages 405-423, August.
    11. John F. Helliwell, 1997. "National Borders, Trade and Migration," NBER Working Papers 6027, National Bureau of Economic Research, Inc.
    12. Bureau, Jean-Christophe & Marette, Stephan & Schiavina, Alessandra, 1998. "Non-tariff Trade Barriers and Consumers' Information: The Case of the EU-US Trade Dispute over Beef," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(4), pages 437-462.
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    More about this item

    Keywords

    Trade types; Adjustment; Asymmetric Liberalization; Europe Agreements;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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