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"We discuss how social considerations can affect the desirability of trade liberalization in a conventional small open economy model. We consider a representative family in which there are location specific network effects from interactions with other family members, such as joint consumption, joint emotional support, and coinsurance. The benefits an individual receives from the network they participate in are nonlinearly related to the number of family members located in urban and rural areas. Family members choose whether to locate in urban or rural areas and average and marginal network benefits differ. With differential network effects in urban and rural areas, in a model with traded urban and rural goods, free trade will no longer be the best policy. We show this through a numerical example, and suggest that the conventional economists case for free trade may need to be more nuanced once social considerations of this type are taken into account"--National Bureau of Economic Research web site.
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Subjects
Business networks, Free trade, Social institutionsShowing 2 featured editions. View all 2 editions?
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Social networks and trade liberalization
2004, National Bureau of Economic Research
Electronic resource
in English
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Book Details
Edition Notes
"September 2004."
Includes bibliographical references.
Also available in PDF from the NBER world wide web site (www.nber.org).
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- Created September 29, 2008
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