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The network origins of the gains from trade

Maarten Bosker Orcid Logo, Bastian Westbrock Orcid Logo

Journal of Economic Theory, Volume: 216, Start page: 105800

Swansea University Author: Bastian Westbrock Orcid Logo

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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...

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Published in: Journal of Economic Theory
ISSN: 0022-0531
Published: Elsevier BV 2024
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URI: https://cronfa.swan.ac.uk/Record/cronfa67527
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last_indexed 2024-11-25T14:20:21Z
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spelling 2024-10-30T12:28:57.4797862 v2 67527 2024-09-02 The network origins of the gains from trade 40408e9de92daaa653357f6b40ed66fd 0000-0002-8303-0808 Bastian Westbrock Bastian Westbrock true false 2024-09-02 SOSS 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. Journal Article Journal of Economic Theory 216 105800 Elsevier BV 0022-0531 Global trade network, Gains from trade, Network diffusion, Trade intermediation 1 3 2024 2024-03-01 10.1016/j.jet.2024.105800 COLLEGE NANME Social Sciences School COLLEGE CODE SOSS Swansea University 2024-10-30T12:28:57.4797862 2024-09-02T15:29:07.7926519 Faculty of Humanities and Social Sciences School of Social Sciences - Economics Maarten Bosker 0000-0003-1941-2120 1 Bastian Westbrock 0000-0002-8303-0808 2 67527__32794__12d050267301461aadb390851bc5ab7c.pdf 67527.VoR.pdf 2024-10-30T12:24:29.1206363 Output 1205834 application/pdf Version of Record true © 2024 The Author(s). This is an open access article under the CC BY license. true eng http://creativecommons.org/licenses/by/4.0/).
title The network origins of the gains from trade
spellingShingle The network origins of the gains from trade
Bastian Westbrock
title_short The network origins of the gains from trade
title_full The network origins of the gains from trade
title_fullStr The network origins of the gains from trade
title_full_unstemmed The network origins of the gains from trade
title_sort The network origins of the gains from trade
author_id_str_mv 40408e9de92daaa653357f6b40ed66fd
author_id_fullname_str_mv 40408e9de92daaa653357f6b40ed66fd_***_Bastian Westbrock
author Bastian Westbrock
author2 Maarten Bosker
Bastian Westbrock
format Journal article
container_title Journal of Economic Theory
container_volume 216
container_start_page 105800
publishDate 2024
institution Swansea University
issn 0022-0531
doi_str_mv 10.1016/j.jet.2024.105800
publisher Elsevier BV
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Social Sciences - Economics{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Social Sciences - Economics
document_store_str 1
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description 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.
published_date 2024-03-01T05:18:33Z
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