Procompetitive Gains from Trade and Comparative Advantage

Trade, Development, and Poverty-Induced Comparative Advantage

This paper deals with the relation between trade and development when poverty affects individual decision making. We develop a twosector model that links production and schooling decisions under poverty with standard neo-classical trade analyses. The decision to either work or acquire skills depends on households having reached subsistence levels of income, implying that the income level of a c...

Measurable Dynamic Gains from Trade

Volatility, Insurance, and the Gains from Trade∗

By reducing the negative correlation between local prices and productivity shocks, trade liberalization changes the volatility of returns. In the context of agriculture in developing countries—where production is risky, producers are risk averse, and insurance markets are incomplete—this change in volatility may have large welfare effects. In this paper, we empirically, analytically, and quanti...

Transboundary Pollution and the Gains from Trade

We analyse the effects of transboundary pollution on trade patterns and welfare in a general equilibrium trade model. Production in a dirty industry generates pollution that negatively effects productivity, both at home and abroad, in a clean industry. Trade may lead to the spatial separation of production but the existence of transboundary pollution can offset the benefits from specialization....

Domestic productivity and variety gains from trade

JEL classification: F1 F12 We show theoretically and confirm empirically that domestic productivity has a significant impact on the demand for foreign varieties under the assumption that domestic and foreign varieties are imperfect substitutes. In particular, the demand for imported varieties ismore elastic for countries with comparative advantage. For an average good facing a median trade barr...