Details

Autor(en) / Beteiligte

• Etro, Federico

Titel

The Heckscher–Ohlin model with monopolistic competition and general preferences

Ist Teil von

• Economics letters, 2017-09, Vol.158, p.26-29

Ort / Verlag

Amsterdam: Elsevier B.V

Erscheinungsjahr

2017

Quelle

Alma/SFX Local Collection

Beschreibungen/Notizen

• I extend the neoclassical 2×2×2 trade model to general preferences over a variety of goods supplied under monopolistic competition in a sector while the other sector is perfectly competitive. Non-homothetic preferences deliver pricing to market, incomplete pass-through and market size effects. Under realistic conditions, the differentiated goods are sold at a higher price in the capital-abundant country. •The note generalizes the Helpman–Krugman model of trade to any preferences over the differentiated goods.•The Heckscher–Ohlin model with general preferences delivers pricing to market in the differentiated goods.•Non-homotheticity generates higher prices in the capital abundant country.•The 2×2×2 model delivers inefficient business creation and pricing when preferences are not CES.