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Journal of Economic Integration 2005 December;20(4) :631-643.
Expansion of Network Integrations: Two Scenarios, Trade Patterns, and Welfare

Noritsugu NakanishiToru Kikuchi 

Kobe University
Copyright ©2005 Journal of Economic Integration

We present two different scenarios of expanding the communication networks (through which the intermediate business services are traded) and examine their consequences on trade patterns in goods and welfare of the countries. The first scenario is the “successive expansion” of a single network integration and the second one is the “parallel expansion” of plural network integrations. We show that the former can have harmful effects on the outside countries, while the latter can be “Pareto-improving” in each stage of the network expansion.

JEL Classifications: F12, F15

Keywords: Network integration | Trade pattern | Successive expension | Parallel expansion
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