Standardization of Intermediate Goods and International Trade

20 Pages Posted: 2 Apr 2008

See all articles by Oliver Lorz

Oliver Lorz

RWTH Aachen University

Matthias Wrede

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

This paper analyzes the relationship between standardization of intermediate inputs and international trade. We employ a two-country, general equilibrium model with differentiated manufacturing goods. Production of manufacturing goods requires specific intermediate inputs, which can be either specialized or standardized. Standardization and the pattern of trade are determined endogenously in our model. In this framework we derive the effects of trade integration, that is, a decline in trading costs for intermediate goods, on the equilibrium outcome.

Suggested Citation

Lorz, Oliver and Wrede, Matthias, Standardization of Intermediate Goods and International Trade. Canadian Journal of Economics/Revue canadienne d'économique, Vol. 41, Issue 2, pp. 517-536, May/mai 2008, Available at SSRN: https://ssrn.com/abstract=1115498 or http://dx.doi.org/10.1111/j.1540-5982.2008.00473.x

Oliver Lorz (Contact Author)

RWTH Aachen University ( email )

Templergraben 55
D-52056 Aachen, 52056
Germany

Matthias Wrede

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics ( email )

Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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