Information led trade: The role of non‐marketed complementaries in preferences

• Published date: 01 March 2021
• Author: Sattwik Santra
• DOI: http://doi.org/10.1111/ijet.12266
• Date: 01 March 2021

Int J Econ Theory. 2021;17:46–56.wileyonlinelibrary.com/journal/ijet46

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© 2020 IAET

DOI: 10.1111/ijet.12266

ORIGINAL ARTICLE

Information led trade: The role of non‐marketed

complementaries in preferences

Sattwik Santra

Centre for Training and Research in Public

Finance and Policy, Centre for Studies in

Social Sciences, Calcutta, India

Correspondence

Sattwik Santra, Centre for Training and

Research in Public Finance and Policy,

Centre for Studies in Social Sciences, R‐1,

Baishnabghata Patuli Township, Kolkata

700094, West Bengal, India.

Email: sattwiks@gmail.com

Abstract

Recent advances in the theoretical literature on in-

ternational trade have shown considerable interest in

the demand side of the general equilibrium. This

paper supplements the literature by highlighting the

role of non‐marketed complementaries. Individuals

derive utility by consuming two marketed commod-

ities and a non‐marketed commodity. The non‐

marketed commodity affects the relative demands of

the marketed commodities by acting as complement

to one of the marketed commodities. Considering

“information”as an exemplar of the non‐marketed

commodity, this paper derives a number of insightful

results that relate the volume and pattern of trade to

the stock and flow of information.

KEYWORDS

complementarity, information flow, non‐marketed commodity,

spatial dynamics, trade, trade cycles

JEL CLASSIFICATION

F10; F11; D11

1|INTRODUCTION

International trade theory is one of the disciplines in economics that has advanced considerably

since its inception. Initial research in this area was primarily devoted to exhibiting factors per-

taining to the supply side of economies, as determinants of trade. Such factors include techno-

logical differences as in the celebrated Ricardian model of trade, or differences in relative factor

endowments and cross‐industry factory intensities as in the Heckscher–Ohlin–Samuelson (HOS)

and specific factor models of trade. Linder (1961) was one of the first contributions to emphasize