Hysteresis in the Trade Pattern / Gene M. Grossman, Elhanan Helpman.

Format:

Book

Author/Creator:

Grossman, Gene M.

Contributor:

National Bureau of Economic Research.

Helpman, Elhanan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3526.

NBER working paper series no. w3526

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1990.

Summary:

We study a world economy comprising two countries that may differ only in their prior experience in the research lab. Entrepreneurs in each country develop new technologies for varieties of a differentiated product whenever expected profits justify up-front research costs. Research productivity depends upon national stocks of knowledge capital, which accumulate in proportion to local research activity. The countries produce and trade their unique varieties of the differentiated good, as well as a homogeneous, "traditional" product. In this context, we ask whether a country can overcome a late start in research to develop a comparative advantage in the high-technology sector. We also examine the welfare properties of the equilibrium trajectory and of policies that might be used to reverse a country's fate.

Notes:

Print version record

December 1990.