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Regional Trade in a Three Country Model

In: THE REGION AND TRADE New Analytical Directions

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  • Henry Thompson

Abstract

This chapter develops a three country model of constant cost production and trade based on productivity and country size. Trade may be limited to two of the countries assuming that gains from trade are necessary for trade to take place. A small country may produce too little to offer gains from trade to the other two. At the other extreme, a country may be too productive to gain from trade. Regional trade is observed if the countries with similar productivities are located closer together, a testable hypothesis.

Suggested Citation

  • Henry Thompson, 2015. "Regional Trade in a Three Country Model," World Scientific Book Chapters, in: Amitrajeet A Batabyal & Peter Nijkamp (ed.), THE REGION AND TRADE New Analytical Directions, chapter 3, pages 67-76, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814520164_0003
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