Belyaev I.A.   Bykadorov I.  

International Trade Models in Monopolistic Competition: the Case of Non-linear Costs

Reporter: Belyaev I.A.

The Dixit-Stiglitz-Krugman model of international trade is investigated. Studying of such models allows to describe modern economic processes and to predict further development of both the separate industries, and economy in general. Two types of the countries differing only by the number of consumers are considered. Transport expenses are "iceberg type", and function of production expenses is nonlinear.

In models of this type, it is customary to study the response of equilibrium quantities to changes in parameters: market size, transportation costs, etc. This study examines comparative statics on transport costs. It is accepted to consider two “marginal” cases: free trade (transport costs are “almost” absent) and autarky (transport costs are so great that international trade “almost” ceases).

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