scholarly journals Trade and Variety in a Model of Endogenous Product Differentiation

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Oliver Lorz ◽  
Matthias Wrede
Keyword(s):  
International Trade ◽  
Product Differentiation ◽  
Market Size ◽  
Fixed Costs ◽  
Trade Integration ◽  
Horizontal Differentiation ◽  
Degree Of Differentiation ◽  
Number Of Firms

Abstract This paper sets up a model of endogenous product differentiation to analyze the variety effects of international trade. In our model multi-product firms decide not only about the number of varieties they will supply but also about the degree of horizontal differentiation between these varieties. Firms can raise the degree of differentiation by investing variety-specific fixed costs. In this setting, we analyze how trade integration, i.e. an increase in market size, influences the number of firms in the market, the number of product varieties supplied by each firm, and the degree of differentiation between these varieties.

scholarly journals Customs brokers as intermediaries in international trade

2020 ◽  
Author(s):  
Hege Medin
Keyword(s):  
International Trade ◽  
Panel Data ◽  
Theoretical Models ◽  
Trade Costs ◽  
Econometric Analysis ◽  
Fixed Costs ◽  
Similar Role ◽  
Product Level ◽  
Producer Country

Abstract Recent studies suggest that intermediaries like merchants facilitate international trade by reducing fixed trade costs for producers that trade through them instead of exporting or importing directly. This study argues that customs brokers–a type of intermediary rarely studied in economics before–play a similar role by reducing fixed costs of clearing goods through customs for firms that use them instead of self-declaring. Using panel data of Norwegian trade transactions, the paper shows that the majority of manufacturing producers participating in international trade use such brokers, and that the brokers typically handle large trade values on behalf of several different produces. In an econometric analysis, the author finds that the share of a producer’s market specific trade that is self-declared rather than handled by brokers increases with the traded value. This is in line with predictions from theoretical models on trade intermediaries and holds after controlling for observed as well as unobserved factors at the producer, country and product level. Results are similar for exporting and importing, indicating that brokers facilitate both modes of trade.

scholarly journals The Strategic Vision behind Vietnam's International Trade Integration

2018 ◽  
Vol 37 (2) ◽  
pp. 3-38 ◽  
Author(s):  
Sophie Deprez
Keyword(s):  
International Trade ◽  
National Interest ◽  
Trade Agreements ◽  
Economic Reforms ◽  
Political Elite ◽  
Economic Power ◽  
Trade Integration ◽  
External Trade ◽  
Oriented Growth ◽  
International Trade Agreements

This paper evaluates the positioning of Vietnam in international trade. It addresses the key question of how Vietnam uses its participation in international trade agreements as a tool to ensure and advance national interest and security through increased economic power. The paper first examines how Vietnam participates in the international integration of the ASEAN Economic Community (AEC), and then looks at the importance for Vietnam to be outward-looking; that is, to participate in trade agreements outside the South-East Asian region. Finally, I examine how reforms required under international trade agreements push Vietnam into domestic economic reforms. My conclusion is that the political elite of Vietnam has identified trade, export-oriented growth and international economic integration as international policy preferences and has used international trade integration as a strategic instrument to maximise these national priorities within the regional and international trade system. Therefore, Vietnam has a very strategic view on international trade integration and uses it as an instrument to ensure its national interest and security through increased economic power. Through careful selection of trade agreements, Vietnam aims to position itself in a strategically advantageous position vis-à-vis other economies of the AEC, to ensure continued economic growth through preferential access to key markets and to push through some of the more difficult and sensitive domestic economic reforms, using its commitments under external trade agreements as a lock-in mechanism.

DO EXCHANGE RATE CHANGES HAVE SYMMETRIC OR ASYMMETRIC EFFECTS ON INTERNATIONAL TRADE INTEGRATION?

2019 ◽  
Vol 14 (03) ◽  
pp. 1950013
Author(s):  
SURESH KUMAR OAD RAJPUT ◽  
NIAZ HUSSAIN GHUMRO ◽  
NADIA ANJUM
Keyword(s):  
International Trade ◽  
Exchange Rate ◽  
Negative Impact ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
Trade Integration ◽  
Asymmetric Effects ◽  
Long Run ◽  
Short Run ◽  
Exchange Rate Changes

This paper investigates whether exchange rate changes have symmetric or asymmetric effects on international trade integration, using quarterly time series data from 1980: Q1 till 2018: Q2. The recent innovation in cointegration techniques allows us to estimate nonlinear effects. We apply both linear autoregressive distributed lags (ARDL) and nonlinear ARDL models. The empirical results indicate that asymmetric relationship exists between exchange rate (REER) and international trade integration (ITI) in the short-run as well as in the long-run, meaning that real effective exchange rate has negative and statistically significant effects on international trade integration. Robustness checks indicate no role of various crisis including GFC on the relationship between ITI and REER, however, regime change has significantly negative impact in short-run and positive in long-run on ITI. The results are important because when we separate currency appreciation from the depreciation, it has the significant and different effects on international trade integration.

scholarly journals Competitive Mixed Bundling of Vertically Differentiated Products

2012 ◽  
Vol 12 (1) ◽  
Author(s):  
Illtae Ahn ◽  
Kiho Yoon
Keyword(s):  
Product Differentiation ◽  
Consumer Surplus ◽  
Competitive Environment ◽  
Differentiated Products ◽  
Horizontal Differentiation ◽  
Vertical Product Differentiation ◽  
Quality Differentiation ◽  
Comparative Static Analysis ◽  
Mixed Bundling ◽  
Vertically Differentiated Products

Abstract We examine mixed bundling in a competitive environment that incorporates vertical product differentiation. We show that, compared to the equilibrium without bundling, (i) prices, profits and social welfare are lower, whereas (ii) consumer surplus is higher in the equilibrium with mixed bundling. In addition, the population of consumers who purchase both products from the same firm is larger in the equilibrium with mixed bundling. These results are largely in line with those obtained in the previous literature on competitive mixed bundling with horizontal differentiation. Further, we conduct a comparative static analysis with respect to changes in quality differentiation parameters. When the quality gap between brands narrows under no bundling and symmetric mixed bundling, prices and profits decrease. When quality differentiation is asymmetric across products, however, complicated effects occur on prices and profits due to strategic interdependence that mixed bundling creates.

Trade Openness, Country Size and Economic Volatility: The Compensation Hypothesis Revisited

2007 ◽  
Vol 9 (2) ◽  
pp. 1-20 ◽  
Author(s):  
Ian Down
Keyword(s):  
Economic Theory ◽  
Twentieth Century ◽  
International Trade ◽  
Trade Openness ◽  
Trade Integration ◽  
Risk Diversification ◽  
Country Size ◽  
Developed Economies ◽  
Economic Volatility ◽  
Compensation Hypothesis

A prominent variant of the compensation hypothesis rests on the premise that increased trade exposure heightens domestic economic volatility, prompting demands for compensation via generous systems of transfers and services. Economic theory suggests that because the expansion of international trade entails integration into larger, deeper, more stable markets, and may entail risk diversification, it may actually promote rather than reduce stability. By the same token, however, economic theory also suggests that smaller economies should experience greater levels of volatility than larger economies, and thus also greater levels of insecurity. The evidence presented here suggests that the level of domestic economic volatility in the developed economies, during the latter half of the twentieth century, may indeed have been driven by the size and depth of markets. And critically, for these countries international trade integration may have eased rather than accentuated domestic economic volatility.

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