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Integration, Fragmentation and the Geography of Welfare
Author(s) -
Dluhosch Barbara
Publication year - 2006
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2006.00466.x
Subject(s) - monopolistic competition , economics , fragmentation (computing) , welfare , production (economics) , endogenous growth theory , international economics , distribution (mathematics) , economic integration , international trade , competition (biology) , economic geography , microeconomics , market economy , ecology , mathematical analysis , mathematics , monopoly , human capital , biology
The welfare effects of trade integration with endogenous production technology are examined in a monopolistic competition framework. In addition to explaining industry location, trade patterns and accompanying effects on local welfare, the analysis highlights the endogenous change in the costs of supervising fragmented production when economies open up to trade. By regarding fragmentation as a skill‐intensive activity, factor proportions (rather than size) strongly affect the international distribution of gains from trade. Nevertheless, albeit not generally, for a wide range of parameter values, even a skill‐poor country can participate in the gains—despite loss of industry.