NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model: A Comment

Svetlana Demidova, Kala Krishna

NBER Working Paper No. 12949
Issued in March 2007
NBER Program(s):   ITI

This paper shows that the results of Venables (1987) depend critically on the assumption that there are no fixed costs of trade. The introduction of fixed costs of exporting, while making the model more consistent with the empirical evidence, leads to the opposite conclusion that technological progress in one country cannot harm the welfare of its trading partner. However, the results can be obtained in a richer setting with heterogeneous firms.

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Document Object Identifier (DOI): 10.3386/w12949

Published: Svetlana Demidova & Kala Krishna, 2007. "Trade and trade policy with differentiated products: A Chamberlinian - Ricardian model. A comment," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 16(3), pages 435-441. citation courtesy of

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