Allocative efficiency, mark-ups, and the welfare gains from trade

• 成果类型: Article
• 署名作者: Holmes, Thomas J.; Hsu, Wen-Tai; Lee, Sanghoon
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; Singapore Management University; University of British Columbia; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; National Bureau of Economic Research
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2014.07.002
• 发表日期: 2014
• 页码: 195-206
• 关键词: Allocative efficiency; Mark-ups; oligopoly

摘要

This paper develops an index of allocative efficiency that depends upon the distribution of mark-ups across goods and is separable from an index of standard Ricardian gains from trade. It determines how changes in trade frictions affect allocative efficiency in an oligopoly model of international trade, decomposing the effect into the cost-change channel and the price-change channel. Formulas are derived shedding light on the signs and magnitudes of the two channels. In symmetric country models, trade tends to increase allocative efficiency through the cost-change channel, yielding a welfare benefit beyond productive efficiency gains. In contrast, the price-change channel has ambiguous effects on allocative efficiency. (C) 2014 Elsevier B.V. All rights reserved.