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Missing Gains from Trade?

Author(s): Melitz, Marc J.; Redding, Stephen J.

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dc.contributor.authorMelitz, Marc J.-
dc.contributor.authorRedding, Stephen J.-
dc.date.accessioned2020-01-23T22:10:13Z-
dc.date.available2020-01-23T22:10:13Z-
dc.date.issued2014-05en_US
dc.identifier.citationMelitz, Marc J, Redding, Stephen J. (2014). Missing Gains from Trade? American Economic Review, 104 (5), 317 - 321. doi:10.1257/aer.104.5.317en_US
dc.identifier.issn0002-8282-
dc.identifier.urihttp://arks.princeton.edu/ark:/88435/pr1db64-
dc.description.abstractIn a class of trade models which satisfy a constant elasticity gravity equation, the welfare gains from trade can be computed using the open economy domestic trade share and a constant trade elasticity. The measured welfare gains from trade from this quantitative approach are typically relatively modest. In this paper, we suggest a channel for welfare gains that this quantitative approach typically abstracts from: trade-induced changes in domestic productivity. Using a model of sequential production, in which trade induces a reorganization of production that raises domestic productivity, we show that the welfare gains from trade can become arbitrarily large.en_US
dc.format.extent317 - 321en_US
dc.language.isoenen_US
dc.relation.ispartofAmerican Economic Reviewen_US
dc.rightsFinal published version. Article is made available in OAR by the publisher's permission or policy.en_US
dc.titleMissing Gains from Trade?en_US
dc.typeJournal Articleen_US
dc.identifier.doidoi:10.1257/aer.104.5.317-
pu.type.symplectichttp://www.symplectic.co.uk/publications/atom-terms/1.0/journal-articleen_US

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