Measuring the gains from trade under monopolistic competition
By: Robert C. Feenstra.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- working paper 15593; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15593.
Publisher: National Bureau of Economic Research
Published: 2009
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "Three sources of gains from trade under monopolistic competition are: (i) new import varieties available to consumers; (ii) enhanced efficiency as more productive firms begin exporting and less productive firms exit; (iii) reduced markups charged by firms due to import competition.  The first source of gains can be measured as new goods in a CES utility function for consumers.  We argue that the second source is formally analogous to the producer gain from new goods, with a constant-elasticity transformation curve for the economy.  We suggest that the third source of gain can be measured using a translog expenditure function for consumers, which in contrast to the CES case, allows for finite reservation prices for new goods and endogenous markups"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 12/29/2009.

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