A dynamic North-South Model of Demand-induced Product Cycles
Journal
Journal of international economics
ISSN
0022-1996
ISSN-Digital
1873-0353
Type
journal article
Date Issued
2018-01
Author(s)
Abstract
This paper presents a dynamic North-South general-equilibrium model where per capita incomes shape demand patterns across regions. Innovation takes place in a rich North while firms in a poor South imitate products manufactured in North. Allowing a role for per capita incomes in determining demand delivers a complete international product cycle as described by Vernon (1966), where the different stages of the product cycle are not only determined by supply-side factors but also by the distribution of income between North and South. We analyze how changes in the gap between North and South due to changes in Southern labor productivity, population size in South and inequality across regions affect the international product cycle. In line with presented stylized facts, we predict a negative correlation between adoption time and per capita incomes.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
NH Elsevier
Publisher place
Amsterdam [u.a.]
Volume
110
Start page
63
End page
86
Subject(s)
Eprints ID
234850
File(s)![Thumbnail Image]()
Name
manuscript.pdf
Size
829.6 KB
Format
Adobe PDF
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