Business Intelligence

Royale With Cheese: The Effect Of Globalization On The Variety Of Goods

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Executive Summary

The key result of the so-called "New Trade Theory" is that countries gain from falling trade costs by an increase in the number of varieties available to consumers. Though the number of varieties in a given country rises, it is also true that global variety decreases from increased competition wherein imported varieties drive out some local varieties. This second result is a major issue for anti-trade activists who criticize the move towards free trade as promoting "Homogenization" or "Americanization" of varieties across countries.

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