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Structural Estimation of Variety Gains from Trade Integration in Asia
Author(s) -
Kancs D’Artis
Publication year - 2010
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.2010.00606.x
Subject(s) - monopolistic competition , economics , variety (cybernetics) , economic integration , estimation , welfare , new trade theory , panel data , intra industry trade , gains from trade , trade barrier , international economics , econometrics , international trade , microeconomics , monopoly , market economy , management , artificial intelligence , computer science
This article studies the variety gains of trade integration in Asia. Adopting a heterogeneous firm model of trade of monopolistic competition allowed us to estimate not only the welfare gains because of country specialisation, but also the variety gains arising from trade integration. The underlying structural parameters were estimated econometrically, based on a large panel of firm‐level data for the Asian economies (ORIANA). Our empirical findings suggest that, when relaxing the assumption of firm homogeneity and accounting for export market entry costs, the gains from trade integration are higher than in conventional models with representative firms.