Monopolistic Competition and North-South Trade

Authors

Reza Oladi, Utah State UniversityFollow
John Gilbert, Utah State UniversityFollow

Document Type

Article

Journal/Book Title/Conference

Review of International Economics

Volume

19

Publication Date

2011

First Page

459

Last Page

474

Abstract

This paper examines the consequences of opening to international trade for a developing economy with open urban unemployment and rural–urban migration, where the urban sector is monopolistically competitive. It is shown that there exists a threshold level of urbanization prior to which increases in product variety will be reflected in increased urban unemployment, that opening to intra‐industry trade with a high‐wage economy (i.e. North–South trade) will reduce the rate of urban unemployment by a greater amount than intra‐industry trade with a similar economy, and that trade intervention in the South may lower welfare by reducing varieties produced in the North.

Recommended Citation

“Monopolistic Competition and North-South Trade,” (with J. Gilbert), Reveiw of International Economics 19, 2011: 459–474.