Purpose: With the use of a two-region monopolistically competitive model, the paper primarly studies how unilateral changes in a country's intra-regional and/or inter-national transport costs affect its own and its trading partner's welfare. Moreover, by considering a three-region...

Purpose: This paper aims to shed light on two mechanisms that show how foreign productivity improvement affects domestic welfare. Design/methodology/approach: First, this study applies a general equilibrium model that takes into account how wages respond to productivity improvements. Second,...