Product Variety and the Gains from International Trade (Zeuthen Lecture Books) - Hardcover

Feenstra, University Robert C

Hardcover

ISBN 10: 0262062801 ISBN 13: 9780262062800

Publisher: MIT Press, 2010

Synopsis

An examination of the methods to measure the product variety of imports and the gains from trade due to product variety.

The application of the monopolistic competition model to international trade by Elhanan Helpman, Paul Krugman, and Kelvin Lancaster was one of the great achievements of international trade theory in the 1970s and 1980s. Monopolistic competition models have required new empirical methods to implement their theoretical insights, however, and in this book Robert Feenstra describes methods that have been developed to measure the product variety of imports and the gains from trade that are due to product variety.

Feenstra first considers the consumer benefits from having access to new import varieties of differentiated products, and examines a recent method to estimate the elasticity of substitution (the extent of differentiation across products) and to use that information to construct the gains from import variety. He then examines claims of producer benefit from export variety, arguing that the self-selection of the more productive firms (as the low-productivity firms exit the market) can be interpreted as a gain from product variety. He makes use of a measurement of product variety known as the extensive margin of exports and imports. Finally, he considers an alternative approach to quantifying the gains due to product variety by comparing real GDP calculated with and without the extensive margin of trade.

About this title

About the Author

Robert C. Feenstra is Professor of Economics and C. Bryan Cameron Distinguished Chair in International Economics at the University of California, Davis. He directs the International Trade and Investment Program at the NBER and is the author of Advanced International Trade: Theory and Evidence and Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications (MIT Press, 2010).

Review

[I]t is one of the most important monographs produced over the last two decades and will be required reading, not only for anyone interested in the gains from trade but also for anyone interested in measuring prices, welfare, and productivity when the set of goods is not constant over time.

―Journal of Economic Literature

About this edition

• Publisher: MIT Press
• Publication date: 2010
• ISBN 10: 0262062801
• ISBN 13: 9780262062800
• Binding: Hardcover
• Number of pages: 133