Journal article 241 views 2 downloads
The network origins of the gains from trade
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Bastian Westbrock
Journal of Economic Theory, Volume: 216, Start page: 105800
Swansea University Author:
Bastian Westbrock
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© 2024 The Author(s). This is an open access article under the CC BY license.
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DOI (Published version): 10.1016/j.jet.2024.105800
Abstract
This paper develops a network perspective on the gains from trade in today's international supply chains. In particular, we demonstrate that the comparative statics predictions of a standard general-equilibrium trade model with input-output linkages can be expressed as a network diffusion model...
| Published in: | Journal of Economic Theory |
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| ISSN: | 0022-0531 |
| Published: |
Elsevier BV
2024
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa67527 |
| Abstract: |
This paper develops a network perspective on the gains from trade in today's international supply chains. In particular, we demonstrate that the comparative statics predictions of a standard general-equilibrium trade model with input-output linkages can be expressed as a network diffusion model. This model captures the relevant dimensions of the production network's structure by just two easily quantifiable statistics: A country's upstream exposure to supply shocks further up in the network and its downstream exposure to demand shocks further down. We then show how up- and downstream exposure crucially determine the welfare effects from various types of trade cost shocks. In some cases, they even capture the entire welfare effect. |
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| Keywords: |
Global trade network, Gains from trade, Network diffusion, Trade intermediation |
| College: |
Faculty of Humanities and Social Sciences |
| Start Page: |
105800 |