Social networks and trade liberalization
By: Manish Pandey, John Whalley.
Contributors: Whalley, John.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10769; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10769.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Free trade.; Business networks.; Social institutions.
Description: "We discuss how social considerations can affect the desirability of trade liberalization in a conventional small open economy model.  We consider a representative family in which there are location specific network effects from interactions with other family members, such as joint consumption, joint emotional support, and coinsurance.  The benefits an individual receives from the network they participate in are nonlinearly related to the number of family members located in urban and rural areas.  Family members choose whether to locate in urban or rural areas and average and marginal network benefits differ.  With differential network effects in urban and rural areas, in a model with traded urban and rural goods, free trade will no longer be the best policy.  We show this through a numerical example, and suggest that the conventional economists case for free trade may need to be more nuanced once social considerations of this type are taken into account"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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