The Impact of the Complementarity of Factors of Production on the Welfare Gains from International Trade

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Jabbari, Masoud | 2016

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 48704 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Madanizadeh, Ali
Abstract:
To answer how large the welfare gains from international trade are, this thesis uses two main ideas: linkages and complementarity. A problem along the production chain can sharply reduce output under complementarity. In such a circumstance, international trade and importing in the sectors which are the weak links of the production chain, help solve this problem. Using a general equilibrium model, it is shown that, the complementarity of the intermediate goods assumption results in much higher welfare gains from international trade compared to similar international trade models which assume the substitutability of the intermediate goods
Keywords:
Complementarity Principle ; Welfare Gains From Trade ; Weak Links ; Trade Elasticity ; Multi-Industry General Equilibrium Model

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