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Title: |
Transport Innovation and Welfare under
Variable Returns to Scale |
| Author: |
Casas, Francois
R.; Choi, E. Kwan |
| Author
Affiliation: |
U Toronto; IA
State U |
| Source: |
International Economic Journal, Spring 1990, v. 4, no. 1, pp. 45-57 |
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Publication Date: |
Spring 1990 |
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Abstract: |
Technological innovations improve the
welfare of a country facing fixed terms of trade, but may lead to
immiserization when the terms of trade adversely affected. This paper
establishes that transport innovation can be immiserizing for a small
country when the transport sector exhibits variable returns to scale.
The release of resources from the transport sector triggers Rybczynski-like
effects, and the resulting expansion (contraction) in the volume of
trade and in the demand for transport services raises unit costs of
these services, and may reduce welfare in the presence of decreasing
(increasing) return to scale. |
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