Template-Type: ReDIF-Paper 1.0
Author-Name: K T Soo
Author-Name-First: K T
Author-Name-Last: Soo
Title: What does the eclectic trade model say about the Samuelson conundrum?
Abstract: Can growth of a trading partner harm a country? This paper seeks to answer this question through the use of an eclectic trade model which is similar in flavour to Markusen (1986). This paper makes two contributions. First, it develops a simple and tractable model of international trade based on a combination of imperfectcompetition, comparative advantage, and identical but non-homothetic preferences in a three country framework. Second, it uses this framework to consider the possibility of losses from partner-country growth in a free-trading environment. We find that the presence of nonhomothetic preferences in particular, leads to a home bias in consumption which
dampens any negative welfare effects when a country's trading partners grow.
Creation-Date: 2006
File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/EclecticTrade_.pdf
File-Format: application/pdf
Number: 578283
Classification-JEL: 
Keywords: International trade, three countries, non-homothetic preferences.
Handle: RePEc:lan:wpaper:578283