On Measuring the Welfare Gains from Trade under Consumer Heterogeneity
نویسنده
چکیده
I develop a multi-country multi-industry model of trade that features heterogeneous consumers with non-homothetic preferences. I use the model to quantify the measurement errors in the welfare gains estimates caused by the assumption of a representative consumer (ARC). First, I reduce the world level of all trade costs by 15% and find that ARC overestimates (underestimates) the gains of the poor (rich) by up to 5 (11) percentage points. Second, I eliminate import tariffs around the globe, and show that (i) the loss of tariff revenues is not negligible for some consumers and (ii) the measurement errors from ARC are between -15 and 4 percentage points.
منابع مشابه
Measuring gains from trade and an application to fair allocation
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