A dynamic North-South Model of Demand-induced Product Cycles

Item Type Journal paper
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.
Authors Föllmi, Reto; Hanslin Grossmann, Sandra & Kohler, Andreas
Journal or Publication Title Journal of international economics
Language English
Subjects economics
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Economic Policy
Refereed Yes
Date January 2018
Publisher NH Elsevier
Place of Publication Amsterdam [u.a.]
Volume 110
Page Range 63-86
ISSN 0022-1996
ISSN-Digital 1873-0353
Publisher DOI https://doi.org/10.1016/j.jinteco.2017.09.002
Depositing User Prof. Dr. Reto Föllmi
Date Deposited 23 Sep 2014 11:19
Last Modified 20 Jul 2022 17:21
URI: https://www.alexandria.unisg.ch/publications/234850


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Föllmi, Reto; Hanslin Grossmann, Sandra & Kohler, Andreas (2018) A dynamic North-South Model of Demand-induced Product Cycles. Journal of international economics, 110 63-86. ISSN 0022-1996


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