Congestible Communications Networks and International Trade

10 Pages Posted: 30 Dec 2002

See all articles by Toru Kikuchi

Toru Kikuchi

Kobe University - Faculty of Economics

Tetsuro Ichikawa

Keio University - Faculty of Economics

Abstract

We build a two-country model of monopolistic competition with communications networks. A communications network is characterized by (1) the existence of large fixed costs of network provision, and (2) the presence of congestion. It is demonstrated that both the size of a country and the relative magnitude of the congestion effect determine its comparative advantage: if the congestion effect (resp., the cost-sharing effect) prevails universally, a comparative advantage in the goods that require communications is held by the smaller (resp., larger) of the two countries.

JEL Classification: D43, F12

Suggested Citation

Kikuchi, Toru and Ichikawa, Tetsuro, Congestible Communications Networks and International Trade. Canadian Journal of Economics, Vol. 35, pp. 331-340, 2002. Available at SSRN: https://ssrn.com/abstract=313268

Toru Kikuchi (Contact Author)

Kobe University - Faculty of Economics ( email )

2-1, Rokkodai
Nada-Ku
Kobe, Hyogo, 657-8501
Japan

Tetsuro Ichikawa

Keio University - Faculty of Economics ( email )

2-15-45 Mita, Ninato-ku
Tokyo 1088345
Japan

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