Endogenous Sunk Costs, Flexible Manufacturing and the Productivity Effects of International Trade

Scandinavian Journal of Economics, 2009, vol. 111, issue 2, 369-386

Abstract: The paper addresses the productivity effects of international trade in the presence of flexible manufacturing and endogenous sunk costs (cost‐reducing R&D). It shows that international trade raises R&D expenditures, but this will not necessarily boost productivity because of possibly counteracting market structure effects. The analysis is conducted in general equilibrium so that implications for real wages and welfare can also be addressed. Both can fall when trade leads to excessive R&D investment.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://doi.org/10.1111/j.1467-9442.2009.01568.x

Related works:
Working Paper: Endogenous sunk costs, flexible manufacturing and the productivity effects of international trade (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:scandj:v:111:y:2009:i:2:p:369-386

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0347-0520

Access Statistics for this article

Scandinavian Journal of Economics is currently edited by Richard Friberg, Matti Liski and Kjetil Storesletten

More articles in Scandinavian Journal of Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().