Credit rationing and pattern of new product trade

Research output: Journal PublicationsJournal Article (refereed)

Abstract

This paper examines credit rationing implications for patterns of international trade in newly invented products. New product development is often associated with risk and its profit is uncertain. When this problem is exacerbated by asymmetric information, credit rationing becomes the optimal strategy of lenders. As a result, a country's pattern of trade is indeterminate. The resulting pattern of trade is not the consequence of comparative advantages or increasing returns to scale.
Original languageEnglish
Pages (from-to)75-95
Number of pages21
JournalJournal of Economic Integration
Volume14
Issue number1
Publication statusPublished - Mar 1999
Externally publishedYes

Bibliographical note

This paper is a revised version of the third chapter of Qiu's dissertation completed at the University of British Columbia.

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