The Effects of Market Integration During the First Globalization: A Multi-Market Approach

57 Pages Posted: 30 Jul 2019

See all articles by David Chilosi

David Chilosi

University of Groningen

Giovanni Federico

University of Pisa

Date Written: June 2019

Abstract

This paper measures the effects of international market integration on world trade and welfare during the first globalization (1815-1913). The analysis is carried out with a multi-market partial equilibrium model, which takes into account the interactions between route-specific changes in trade costs. We consider world trade in the two principal traded commodities, cotton and wheat. The collapse in trade costs accounted for 60% of the increase in trade in cotton and 40% of the increase in trade of wheat. Both producers and consumers gained, but welfare gains were inversely related to the size of the country and positively to the level of openness to trade. We infer that welfare gains from international market integration were equivalent to substantial shares of economic growth in the 'long 19th century'.

Keywords: Globalization, market integration, Trade, welfare gains

Suggested Citation

Chilosi, David and Federico, Giovanni, The Effects of Market Integration During the First Globalization: A Multi-Market Approach (June 2019). CEPR Discussion Paper No. DP13818. Available at SSRN: https://ssrn.com/abstract=3428338

David Chilosi (Contact Author)

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Giovanni Federico

University of Pisa ( email )

Lungarno Pacinotti, 43
Pisa PI, 56126
Italy

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