The Gains from Variety in the European Union

Lukas Mohler and Michael Seitz

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: Over the last decade, European Union members have experienced a dramatic increase in imports. This increase was accompanied by a strong growth in the number of imported goods and trading partners, indicating positive welfare gains for consumers via an extended set of consumption possibilities, as pointed out in the "New Trade Theory". In this paper, we apply the methodology developed by Feenstra (1994) and Broda and Weinstein (2006) to estimate structurally the gains from imported variety for the 27 countries of the European Union using highly disaggregated trade data at the HTS-8 level from Eurostat for the period of 1999 to 2008. Our results show that, within the European Union, especially “newer” and smaller member states exhibit high gains from newly imported varieties. Furthermore, we find that the vast majority of the gains from variety for consumers stem from intra-European Union trade.

Keywords: European Union; Welfare Gains from Trade; Trade in Variety (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-eec, nep-eur and nep-int
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The gains from variety in the European Union (2012)
Working Paper: The gains from variety in the European Union (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:11477

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