International trade and cultural diversity with preference selection

Abstract We consider the evolution of preferences when trade occurs between two countries. We show that if one country is much larger than the other, the preferences of the large country can take over the preferences of the small country. This may explain why some small countries exclude certain goods (especially those related to culture) from trade liberalization agreements. We also show that when the sensitivity of preferences to relative price is high, the distribution of preferences can fluctuate over time.

[1]  Edi Karni,et al.  FIXED PREFERENCES AND CHANGING TASTES , 1990 .

[2]  G. Becker,et al.  Nobel Lecture: The Economic Way of Looking at Behavior , 1993, Journal of Political Economy.

[3]  J. Hirshleifer.  Economics from a Biological Viewpoint , 1977, The Journal of Law and Economics.

[4]  S. Suranovic,et al.  Cultural Effects of Trade Liberalization , 2005 .

[5]  Alberto Bisin,et al.  A model of cultural transmission, voting and political ideology , 2000 .

[6]  Wolfgang Pesendorfer,et al.  Design Innovation and Fashion Cycles , 1995 .

[7]  Arthur J. Robson,et al.  A Biological Basis for Expected and Non-expected Utility , 1996 .

[8]  W. Arthur,et al.  INCREASING RETURNS AND LOCK-IN BY HISTORICAL EVENTS , 1989 .

[9]  Gary S. Becker,et al.  Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology , 1976 .

[10]  S. Bikhchandani,et al.  You have printed the following article : A Theory of Fads , Fashion , Custom , and Cultural Change as Informational Cascades , 2007 .

[11]  Josef Hofbauer,et al.  The theory of evolution and dynamical systems , 1988 .

[12]  T. Schelling.  Micromotives and Macrobehavior , 1978 .

[13]  Jack Hirshleifer,et al.  Competition, Cooperation, and Conflict in Economics and Biology , 1978 .

[14]  E. Rogers.  Diffusion of Innovations , 1962 .

[15]  Kevin M. Murphy,et al.  A Theory of Rational Addiction , 1988, Journal of Political Economy.

[16]  R. Dawkins.  The Blind Watchmaker , 1986 .

[17]  Patrick Francois,et al.  On the protection of cultural goods , 2002 .

[18]  V. Weizsäcker,et al.  Notes on endogenous change of tastes , 1971 .

[19]  T. Bergstrom.  On the Evolution of Altruistic Ethical Rules for Siblings , 1995 .

[20]  George J. Mailath,et al.  Introduction: Symposium on evolutionary game theory , 1992 .

[21]  Alberto Bisin,et al.  The Economics of Cultural Transmission and the Dynamics of Preferences , 2001, J. Econ. Theory.

[22]  S. Jones.  The Economics of Conformism , 1984 .

[23]  R. Devaney.  An Introduction to Chaotic Dynamical Systems , 1990 .

[24]  M W Feldman,et al.  Cultural versus biological inheritance: phenotypic transmission from parents to children. (A theory of the effect of parental phenotypes on children's phenotypes). , 1973, American journal of human genetics.

[25]  Charles Stuart,et al.  Malthusian Selection of Preferences , 1990 .

[26]  C. Shapiro,et al.  Technology Adoption in the Presence of Network Externalities , 1986, Journal of Political Economy.

[27]  Daniel Leonard,et al.  Market behavior of rational addicts , 1989 .

[28]  R. Hall,et al.  Occupational Mobility and the Distribution of Occupational Success among Young Men , 1976 .

[29]  H. Leibenstein.  Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand , 1950 .

[30]  Alan R. Rogers,et al.  Evolution of Time Preference by Natural Selection , 1994 .

[31]  George A. Akerlof,et al.  Economics and Identity , 2000 .