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Volume of bilateral trade should be greater between

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Unformatted text preview: e U.S. imports from all countries. •  How to evaluate the benefits of variety growth? –  Increase in variety is evaluated as a 1.2% drop in prices per year –  US imported on average $ 90 billion per year from Mexico  Savings of $ 1.1 billion per year (90*1.2%) Other Empirical Evidence Testable predic/ons derived from the monopolis/c compe//on model of trade: 1.  Volume of bilateral trade should be greater between large countries. Why? –  –  Large countries produce more varie/es => more exports Large countries have larger demands => alrac/ve markets for many foreign firms producing di...
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