Four essays on international trade in variety

This dissertation contains four essays on the effects of product variety on the economy in the context of international trade. More specifically, all four papers contribute to the empirical literature that aims to quantify the welfare gains from trade, originating from an increased product variety set available in an economy. In summary, the first two papers of this dissertation contain variety gains estimates for 29 economies (Switzerland, the United States and the EU-27 countries). While these estimates are relevant on their own, the cross-country comparisons yield various insights on possible sources and determinants of the variety gains from trade. The results also raise new questions to be investigated in future research. For example, the underlying reasons for time-series variations in traded variety, which I show to differ fundamentally between different countries, have not yet been explored systematically in the literature. Papers three and four are then dedicated to important issues concerning the magnitude of variety gains estimates. The findings presented in these essays indicate that the size of the variety gains heavily depend, first, on the chosen variety definition and, second, on the impact that globalization has on the domestic market of an economy. With the availability of more sophisticated datasets, both subjects are prospective topics for future work in this field. Furthermore, the interdependence of the domestic and tradable sectors of an economy in the context of variety gains - or trade gains in general- offers numerous unexplored questions for future research.