Credit rationing and pattern of new product trade

Larry D. QIU

Credit rationing and pattern of new product trade

Research output: Journal Publications › Journal Article (refereed) › peer-review

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 language	English
Pages (from-to)	75-95
Number of pages	21
Journal	Journal of Economic Integration
Volume	14
Issue number	1
Publication status	Published - Mar 1999
Externally published	Yes

Bibliographical note

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

Cite this

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title = "Credit rationing and pattern of new product trade",

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.",

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N2 - 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.

AB - 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.

M3 - Journal Article (refereed)

SN - 1225-651X

VL - 14

SP - 75

EP - 95

JO - Journal of Economic Integration

JF - Journal of Economic Integration

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