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A Ricardian Model of New Trade and Location Theory

Author

Listed:
  • Antonio Ricci, Luca

    () (International Monetary Fund)

Abstract

This paper provides a new model of firm’s location choices. It integrates a Ricardian model of comparative advantage with the location effects deriving from trade costs, increasing returns to scale, product dif ferentiation, and monopolistic competition. In a two-region, two-differentiated-good, one-factor framework, the regional degree of specialization depends positively on the extent of the comparative advantage in productivity and on the degree of returns to scale; it depends negatively on the magnitude of the trade costs. Hence, the model accommodates high levels of intra-industry trade among countries with similar level of development, as well as high levels of interindustry trade among countries with different technologies.

Suggested Citation

  • Antonio Ricci, Luca, 1997. "A Ricardian Model of New Trade and Location Theory," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 47-61.
  • Handle: RePEc:ris:integr:0038
    as

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    References listed on IDEAS

    as
    1. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November.
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November.
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    Citations

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    Cited by:

    1. Karine Daniel, 2007. "Ouverture des marchés et localisation des productions agricoles Market openness and location of agricultural activities," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 55(3), pages 327-347, September.
    2. Antonio Ricci, Luca, 1999. "Economic geography and comparative advantage:: Agglomeration versus specialization," European Economic Review, Elsevier, vol. 43(2), pages 357-377, February.
    3. Kwok Tong Soo, 2016. "Intra-industry trade: A Krugman–Ricardo Model and Data," Economica, London School of Economics and Political Science, vol. 83(330), pages 338-355, April.
    4. Kwok Tong Soo, 2013. "Intra-industry trade," Working Papers 33867578, Lancaster University Management School, Economics Department.
    5. Konchyn, Vadym, 2006. "The Evolution of Ukrainian Economy: New Trade Theory Evidence," MPRA Paper 588, University Library of Munich, Germany, revised 07 Sep 2006.

    More about this item

    Keywords

    Ricardian; Model;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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