Integration, Fragmentation and the Geography of Welfare

21 Pages Posted: 2 Nov 2006

See all articles by Barbara Dluhosch

Barbara Dluhosch

University of the German Federal Armed Forces - Helmut Schmidt Universität

Abstract

The welfare effects of trade integration with endogenous production technology are examined in a monopolistic competition framework. In addition to explaining industry location, trade patterns and accompanying effects on local welfare, the analysis highlights the endogenous change in the costs of supervising fragmented production when economies open up to trade. By regarding fragmentation as a skill-intensive activity, factor proportions (rather than size) strongly affect the international distribution of gains from trade. Nevertheless, albeit not generally, for a wide range of parameter values, even a skill-poor country can participate in the gainsdespite loss of industry.

Suggested Citation

Dluhosch, Barbara, Integration, Fragmentation and the Geography of Welfare. Scandinavian Journal of Economics, Vol. 108, No. 3, pp. 459-479, October 2006, Available at SSRN: https://ssrn.com/abstract=941857 or http://dx.doi.org/10.1111/j.1467-9442.2006.00466.x

Barbara Dluhosch (Contact Author)

University of the German Federal Armed Forces - Helmut Schmidt Universität ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

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