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Comparative Advantage and the Location of Production

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  • Rikard Forslid
  • Ian Wooton

Abstract

The paper returns to a familiar topic in international trade, comparative advantage, introducing it into Krugman's classic, core-periphery model of economic geography. This extra force of dispersion radically changes the stability properties of the model. Instead of the familiar result that trade liberalization leads to increased industrial concentration, lowering trade costs leads initially to increased concentration and then to dispersion of production. When a pattern of comparative advantage exists, integration may lead to international specialization of production. This may be good news for peripheral countries, which may be able to retain industry despite the attraction of the core. Copyright Blackwell Publishing Ltd 2003.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 11 (2003)
Issue (Month): 4 (09)
Pages: 588-603

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Handle: RePEc:bla:reviec:v:11:y:2003:i:4:p:588-603

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  1. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(3), pages 483-99, June.
  2. Gianmarco I. P. Ottaviano & Diego Puga, 1998. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 21(6), pages 707-731, 08.
  3. Krugman, Paul & Venables, Anthony J., 1994. "Globalization and the Inequality of Nations," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1015, C.E.P.R. Discussion Papers.
  4. Rodney D. Ludema & Ian Wooton, 1997. "Regional Integration, Trade, and Migration: Are Demand Linkages Relevant in Europe?," Working Papers, Business School - Economics, University of Glasgow 9704, Business School - Economics, University of Glasgow, revised Jul 1997.
  5. Anthony J. Venables, 1993. "Equilibrium Locations of Vertically Linked Industries," CEP Discussion Papers, Centre for Economic Performance, LSE dp0137, Centre for Economic Performance, LSE.
  6. P Krugman & Anthony J. Venables, 1993. "Intergration," CEP Discussion Papers, Centre for Economic Performance, LSE dp0172, Centre for Economic Performance, LSE.
  7. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262561476, December.
  8. Rodney D. Ludema & Ian Wooton, 1998. "Economic Geography and the Fiscal Effects of Regional Integration," Working Papers, Business School - Economics, University of Glasgow 9809, Business School - Economics, University of Glasgow.
  9. repec:ltr:wpaper:1998.02 is not listed on IDEAS
  10. Mary Amiti, 1998. "Will Labour Intensive Industries Always Locate in Labour Abundant Countries?," Working Papers, School of Economics, La Trobe University 1998.02, School of Economics, La Trobe University.
  11. repec:fth:latrob:90-02 is not listed on IDEAS
  12. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, Elsevier, vol. 37(2-3), pages 293-298, April.
  13. repec:fth:iniesr:430 is not listed on IDEAS
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