Migrant landlords and trade in a lumpy country
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Date
1992-06
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Publisher
Institute of Public Policy studies , Michigan
Abstract
Inter-regional mobility of land owner is introduced into the 2-good, 2-factor, 2-region, lumpy country model to determine the extent to which such mobility alters the effects of lumpiness on trade. As long as labour is immobile between regions,movement of landowners-in response,say,to an advantage of one region over the other in providing amenities or noncompeting nontraded goods-does not alter the pattern of trade of the country as a whole. It does however,alter the pattern of inter-regional trade within the country, with the more attractive region importing more of tradable goods and paying for them with the rental incomes of the absentee land owners who are attracted to live there. If labour is also mobile, then movement of landowners can displace, due to congestion,a portion of the labour movement that would otherwise occur, possibly reducing the likelihood that lumpiness will lead to trade. On the other hand, if labour is immobile but nontraded goods compete with traded goods for factors of production, movement of land owners may so tie up those factors in producing nontraded goods that regions are driven to specialization in traded goods.
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Keywords
Trade, Migrant landlords