Balistreri, Edward J.
Hillberry, Russell H.
Rutherford, Thomas F.
- Working Paper
Rights / licenseIn Copyright - Non-Commercial Use Permitted
Many contemporary theoretic studies of trade over geography reduce to an ex- amination of constant-elasticity reactions to changes in iceberg trade costs. These impacts are readily analyzed in simple constant-returns models based on the Arm- ington (1969) assumption of regionally differentiated goods. Following the line of reasoning suggested by Arkolakis et al. (2008) one can reach the surprising conclu- sion that industrial organization does not matter. In the present paper, we show that this finding is fragile, and with a minor elaboration of their model, the rich industrial-organization features of the popular Melitz (2003) model do, in fact, gen- erate important differences for trade and welfare Show more
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Journal / seriesEconomics Working Paper Series
PublisherETH Zurich, Center of Economic Research (CER-ETH)
SubjectVariety effects; Heterogeneous firms; Gains from trade
Organisational unit02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.
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Is previous version of: http://hdl.handle.net/20.500.11850/26113
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