No Trade, One-Way or Two-Way Trade?

33 Pages Posted: 27 Dec 2010

See all articles by Toshihiro Okubo

Toshihiro Okubo

University of Geneva - Graduate Institute of International Studies (HEI)

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA); Universite du Luxembourg

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Date Written: December 2010

Abstract

We study how the level of trade costs and the intensity of competition can explain the existence of two-way, one-way or no trade within the same industry. As trade costs decrease from very high to very low values, the economy moves from autarky to a regime of two-way trade, through a regime of one-way trade from the larger to the smaller country. Trade is less likely when the economy gets more competitive. Finally once capital is mobile across countries, the market delivers an outcome in which capital is too much concentrated in the large country.

Keywords: capital mobility, country asymmetry, trade regime

JEL Classification: F12, H22, H87, R12

Suggested Citation

Okubo, Toshihiro and Picard, Pierre M. and Thisse, Jacques-François, No Trade, One-Way or Two-Way Trade? (December 2010). CEPR Discussion Paper No. DP8161. Available at SSRN: https://ssrn.com/abstract=1729579

Toshihiro Okubo (Contact Author)

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland
+41 22 908 5900 (Phone)

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA) ( email )

Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
6
Abstract Views
387
PlumX Metrics