Download This PaperThe Heckscher-Ohlin Model with Monopolistic Competition and General Preferences
11 Pages Posted: 11 Jul 2017
Date Written: June 2017
Abstract
I extend the neoclassical 2x2x2 trade model to general preferences over a variety of goods supplied under monopolistic competition in a sector while the other sector is perfectly competitive. Non-homothetic preferences deliver pricing to market, incomplete pass-through and market size effects. Under realistic conditions, the differentiated goods are sold at a higher price in the capital-abundant country.
Keywords: Monopolistic Competition, Heckscher-Ohlin Model, Non-Homothetic Preferences, International Trade
JEL Classification: F11, F12
Suggested Citation: Suggested Citation
Etro, Federico, The Heckscher-Ohlin Model with Monopolistic Competition and General Preferences (June 2017). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 10/WP/2017, Available at SSRN: https://ssrn.com/abstract=2998169 or http://dx.doi.org/10.2139/ssrn.2998169
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