Goods trade, factor mobility and welfare

Redding, Stephen J. (2012) Goods trade, factor mobility and welfare. CEP Discussion Papers (CEPDP1140). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

This paper extends a recent class of quantitative models of international trade to incorporate factor mobility within countries. We present a model-based decomposition of the variance of economic activity into the contributions of locational fundamentals, market access and their covariance. We show how the standard framework for undertaking model-based counterfactuals in trade can be augmented to obtain predictions for endogenous changes in the distribution of economic activity across regions within countries. A region’s trade share with itself is no longer a sufficient statistic for the welfare gains from trade, which also depend on endogenous changes in the distribution of mobile factors.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2012 The Author(s)
Divisions:	LSE
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce
JEL classification:	F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions
Date Deposited:	21 Feb 2024 14:36
Last Modified:	11 Sep 2025 05:17
URI:	http://eprints.lse.ac.uk/id/eprint/121911

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