Country-Specific Communications Networks and International Trade in a Model of Monopolistic Competition

10 Pages Posted: 12 May 2003

See all articles by Toru Kikuchi

Toru Kikuchi

Kobe University - Faculty of Economics

Abstract

This study develops a model of monopolistic competition that captures the role of country specific communications networks in determining the comparative advantages of countries. A communications network is characterized by (1) the existence of a large fixed cost for its construction; and (2) a public monopoly that employs average cost pricing. It is demonstrated that the size of a country, measured by the size of the country's endowment of factors of production, determines its comparative advantage. A comparative advantage in the goods that require services provided by a communications network is held by the larger of two countries.

JEL Classification: D43, F12

Suggested Citation

Kikuchi, Toru, Country-Specific Communications Networks and International Trade in a Model of Monopolistic Competition. Japanese Economic Review, Vol. 53, pp. 167-176, 2002. Available at SSRN: https://ssrn.com/abstract=324704

Toru Kikuchi (Contact Author)

Kobe University - Faculty of Economics ( email )

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

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