The gains from trade revisited
AbstractThis paper revisits the issue of whether countries gain more from trading with countries that are similar to themselves, or with countries that are different. A model based on relative endowment and technological differences across countries is developed. The main result is that a country may experience a region of increasing gains from trade as its trading partner becomes more similar to itself in terms of relative endowments. The model also predicts that for countries with sufficiently similar relative endowments, both factors of production may experience gains from trade.
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Bibliographic InfoArticle provided by Elsevier in its journal International Review of Economics & Finance.
Volume (Year): 20 (2011)
Issue (Month): 2 (April)
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Web page: http://www.elsevier.com/locate/inca/620165
Gains from trade Neoclassical trade model;
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- Tong Soo, Kwok, 2009. "Relative Endowments and the Volume of Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 744-764.
- Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
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