Trade and direct investment in producer services and the domestic market for expertise Journal Article uri icon



  • Abstract.  Foreign producer services can provide substantial benefits for domestic firms. We build on earlier monopolistic‐competition models of intermediate producer services in this paper. Results show that: (1) while foreign services are partial‐equilibrium substitutes for domestic skilled labour, they may be general‐equilibrium complements, (2) service trade can provide crucial missing inputs that reverse comparative advantage in final goods, (3) the ‘optimal’ tax on imported services may be a subsidy, and (4) in our dynamic formulation, there may be earnings losses for immobile workers along a transition path that suggest potentially important equity consequences of reform. JEL classification: F12, F16, F23

publication date

  • August 1, 2005

has restriction

  • green

Date in CU Experts

  • July 10, 2014 6:01 AM

Full Author List

  • Markusen J; Rutherford TF; Tarr D

author count

  • 3

Other Profiles

International Standard Serial Number (ISSN)

  • 0008-4085

Electronic International Standard Serial Number (EISSN)

  • 1540-5982

Additional Document Info

start page

  • 758

end page

  • 777


  • 38


  • 3