Case Review

CASE REVIEW

GLOBALIZATION AND THE GAINS FROM VARIETY

By: Christian Broda; David E. Weinstein

INTERNATIONAL MANAGEMENT

01/30/2016

Introduction

For the paper I read represents the first attempt to provide an answer to the question of how much increases in traded varieties matter for the US. Analyzing the most disaggregated US import data available for the period between 1972 and 2001, they find that consumers have low elasticity of substitution across similar goods produced in different countries. Moreover, They find that the four-fold increase in available global varieties arising in the last 30 years has produced a large welfare gain for the United States. Increases in imported varieties have raised US real income by about 3 percent.

Their results provide the importance of thinking about international trade.

Section 1

Of course, I really support their opinion; I think globalization and the numerous in varieties are good for gains. It is easy to understand that more choice with the more consume

Section 2

In the paper GLOBALIZATION AND THE GAINS FROM VARIETY

Their also use the CES utility function to prove their thesis. And the important point is “Why do varieties matter?” All studies that seek to quantify the potential gains from variety are forced to impose some structure on how

varieties might affect welfare. There is little question that in international trade, economic geography, and macroeconomics, the SDS framework is the preferred way of specifying how consumers value variety.

For example: overseas purchasing. As I know it is really popular part-time job for foreign students. Like my friend she is overseas purchasing, and she will go outlet every week to shipping spree. Her income reached 20000 RMB each month. It is high income in China. Why the Chinese like the product made in USA? The reasons:

* Worship and has blind faith in foreign things.

* Numerous in varieties. People can choice what they like.

* Too much...