Royale with cheese : the effect of globalization on the variety of goods

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dc.contributor.author Cole, Matthew T.
dc.contributor.author Davies, Ronald B.
dc.date.accessioned 2010-12-14T15:13:37Z
dc.date.available 2010-12-14T15:13:37Z
dc.date.issued 2010-07
dc.identifier.uri http://hdl.handle.net/10197/2657
dc.description.abstract The key result of the so-called “New Trade Theory” is that countries gain from falling trade costs by an increase in the number of varieties available to consumers. Though the number of varieties in a given country rises, it is also true that global variety decreases from increased competition wherein imported varieties drive out some local varieties. This second result is a major issue for anti-trade activists who criticize the move towards free trade as promoting “homogenization” or “Americanization” of varieties across countries. We present a model of endogenous entry with heterogeneous firms which models this concern in two ways: a portion of a consumer’s income is spent overseas (i.e. tourism) and an existence value (a common tool in environmental economics where simply knowing that a species exists provides utility). Since lowering trade costs induces additional varieties to export and drives out some non-exported varieties, these modifications result in welfare losses not accounted for in the existing literature. Nevertheless, it is only through the existence value that welfare can fall as a result of declining trade barriers. Thus, for these criticisms of globalization to dominate, it must be that this loss in the existence value outweighs the direct benefits from consumption. en
dc.description.sponsorship Not applicable en
dc.format.extent 167860 bytes
dc.format.mimetype application/pdf
dc.language.iso en en
dc.publisher University College Dublin. School of Economics en
dc.relation.ispartofseries UCD Centre for Economic Research Working Paper Series en
dc.relation.ispartofseries WP 10 24 en
dc.relation.requires Economists Online Collection en
dc.subject Trade theory en
dc.subject Globalization en
dc.subject Variety en
dc.subject Tourism en
dc.subject.classification F10 en
dc.subject.classification F12 en
dc.subject.classification F13 en
dc.subject.mesh International trade--Econometric models en
dc.subject.mesh Globalization en
dc.subject.mesh Commercial policy en
dc.title Royale with cheese : the effect of globalization on the variety of goods en
dc.type Working Paper en
dc.internal.availability Full text available en
dc.status Not peer reviewed en
dc.neeo.contributor Cole|Matthew T.|aut| en
dc.neeo.contributor Davies|Ronald B.|aut| en


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