An International Trade Model with Entrepreneurs and Financial Markets

Bodil Olai Hansen, Hans Keiding

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Abstrakt

We consider a two-period model of a three-country world with free trade in finished products and some factor mobility, where production is subject to uncertainty. Enterpreneurs may establish production in other countries but can obtain financing only in the country of origin. In this model, integrating production across countries, in particular integrating economically strong and weak partners, may give rise to a welfare loss, showing that traditional views on efficiency of international trade must be reconsidered when risk and uncertainty are taken into account.
OriginalsprogEngelsk
TidsskriftTechnology and Investment
Vol/bind7
Udgave nummer3
Sider (fra-til)96-106
ISSN2150-4059
DOI
StatusUdgivet - aug. 2016

Emneord

  • International trade
  • Entrepreneurs
  • Pareto Inferior Trade
  • Regional integration

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