Expansion of Network Integrations: Two Scenarios, Trade Patterns, and Welfare

We present two different scenarios of expanding the communication networks (through which the intermediate business services are traded) and examine their consequences on trade patterns in goods and welfare of the countries. The first scenario is the “successive expansion” of a single network integration and the second one is the “parallel expansion” of plural network integrations. We show that the former can have harmful effects on the outside countries, while the latter can be “Pareto-improving” in each stage of the network expansion.