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A world trade model based on comparative advantage with m regions, n goods, and k factors

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  • Faye Duchin

Abstract

This paper describes the World Trade Model, a linear program that determines world prices, scarcity rents, and international trade flows based on comparative advantage in a world economy with m regions, n goods, and k factors. The new model generalizes the World Model of Leontief et al. (1977) in ways that make it particularly useful for analyzing scenarios about sustainable development. Major properties of the model are demonstrated, and sources of the gains from trade are identified for the world as a whole and for individual regions. Illustrative results are reported for a 10-region, 8-good, 3-factor model of the world economy.

Suggested Citation

  • Faye Duchin, 2005. "A world trade model based on comparative advantage with m regions, n goods, and k factors," Economic Systems Research, Taylor & Francis Journals, vol. 17(2), pages 141-162.
  • Handle: RePEc:taf:ecsysr:v:17:y:2005:i:2:p:141-162 DOI: 10.1080/09535310500114903
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    1. Duchin, Faye & Lange, Glenn-Marie, 1995. "The choice of technology and associated changes in prices in the U.S. economy," Structural Change and Economic Dynamics, Elsevier, vol. 6(3), pages 335-357, August.
    2. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985, December.
    3. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    4. Anders Hammer Strømman & Faye Duchin, 2005. "A World Trade Model with Bilateral Trade Based on Comparative Advantage," Rensselaer Working Papers in Economics 0509, Rensselaer Polytechnic Institute, Department of Economics, revised Jun 2006.
    5. Chandrima Sikdar & Thijs ten Raa & Pierre Mohnen & Debesh Chakraborty, 2009. "Bilateral Trade between India and Bangladesh: A General Equilibrium Approach," World Scientific Book Chapters,in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 25, pages 487-518 World Scientific Publishing Co. Pte. Ltd..
    6. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, pages 1029-1046.
    7. Leontief, Wassily, 1977. "The future of the world economy+," Socio-Economic Planning Sciences, Elsevier, vol. 11(3), pages 171-182.
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    Cited by:

    1. Tukker, Arnold & Poliakov, Evgueni & Heijungs, Reinout & Hawkins, Troy & Neuwahl, Frederik & Rueda-Cantuche, José M. & Giljum, Stefan & Moll, Stephan & Oosterhaven, Jan & Bouwmeester, Maaike, 2009. "Towards a global multi-regional environmentally extended input-output database," Ecological Economics, Elsevier, vol. 68(7), pages 1928-1937, May.
    2. Zafrilla, Jorge Enrique & López, Luis Antonio & Cadarso, María Ángeles & Dejuán, Óscar, 2012. "Fulfilling the Kyoto protocol in Spain: A matter of economic crisis or environmental policies?," Energy Policy, Elsevier, vol. 51(C), pages 708-719.
    3. Faye Duchin & Stephen H. Levine, 2010. "Embodied Resource Flows and Product Flows: Combining the Absorbing Markov Chain with the Input-Output Model," Rensselaer Working Papers in Economics 1002, Rensselaer Polytechnic Institute, Department of Economics.
    4. Roxana Juliá & Faye Duchin, 2013. "Land Use Change and Global Adaptations to Climate Change," Sustainability, MDPI, Open Access Journal, vol. 5(12), pages 1-18, December.
    5. Geir B. Asheim & Frikk Nesje, 2016. "Destructive Intergenerational Altruism," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(4), pages 957-984.
    6. Lining He & Faye Duchin, 2007. "Regional Development in China: Interregional Transportation Infrastructure and Regional Comparative Advantage," Rensselaer Working Papers in Economics 0705, Rensselaer Polytechnic Institute, Department of Economics.
    7. Chandrima Sikdar & Thijs ten Raa & Pierre Mohnen & Debesh Chakraborty, 2009. "Bilateral Trade between India and Bangladesh: A General Equilibrium Approach," World Scientific Book Chapters,in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 25, pages 487-518 World Scientific Publishing Co. Pte. Ltd..
    8. Faye Duchin, 2007. "Energy and the Global Economy," Rensselaer Working Papers in Economics 0704, Rensselaer Polytechnic Institute, Department of Economics.
    9. Wiedmann, Thomas, 2009. "A review of recent multi-region input-output models used for consumption-based emission and resource accounting," Ecological Economics, Elsevier, vol. 69(2), pages 211-222, December.
    10. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, pages 1-18.
    11. Kratena, Kurt, 2008. "From ecological footprint to ecological rent: An economic indicator for resource constraints," Ecological Economics, Elsevier, vol. 64(3), pages 507-516, January.
    12. Faye Duchin & Stephen Levine, 2012. "The rectangular sector-by-technology model: not every economy produces every product and some products may rely on several technologies simultaneously," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 1(1), pages 1-11, December.
    13. Lindstad, Haakon & Asbjørnslett, Bjørn E. & Strømman, Anders H., 2011. "Reductions in greenhouse gas emissions and cost by shipping at lower speeds," Energy Policy, Elsevier, vol. 39(6), pages 3456-3464, June.
    14. Lining He & Faye Duchin, 2009. "Regional Development In China: Interregional Transportation Infrastructure And Regional Comparative Advantage," Economic Systems Research, Taylor & Francis Journals, pages 3-22.
    15. Anders Hammer Strømman & Faye Duchin, 2005. "A World Trade Model with Bilateral Trade Based on Comparative Advantage," Rensselaer Working Papers in Economics 0509, Rensselaer Polytechnic Institute, Department of Economics, revised Jun 2006.
    16. Chen, Z.M. & Chen, G.Q., 2011. "Embodied carbon dioxide emission at supra-national scale: A coalition analysis for G7, BRIC, and the rest of the world," Energy Policy, Elsevier, vol. 39(5), pages 2899-2909, May.
    17. Huppes, Gjalt & Ishikawa, Masanobu, 2009. "Eco-efficiency guiding micro-level actions towards sustainability: Ten basic steps for analysis," Ecological Economics, Elsevier, vol. 68(6), pages 1687-1700, April.
    18. Kagawa, Shigemi, 2008. "How does Japanese compliance with the Kyoto Protocol affect environmental productivity in China and Japan?," Structural Change and Economic Dynamics, Elsevier, vol. 19(2), pages 173-188, June.
    19. Alexandre Tisserant & Stefan Pauliuk, 2016. "Matching global cobalt demand under different scenarios for co-production and mining attractiveness," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-19, December.
    20. Rueda-Cantuche, José M. & Amores, Antonio F., 2010. "Consistent and unbiased carbon dioxide emission multipliers: Performance of Danish emission reductions via external trade," Ecological Economics, Elsevier, vol. 69(5), pages 988-998, March.
    21. Freire Junior, Clovis, 2017. "Economic diversification: Explaining the pattern of diversification in the global economy and its implications for fostering diversification in poorer countries," MERIT Working Papers 033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    22. Wiedmann, Thomas & Lenzen, Manfred & Turner, Karen & Barrett, John, 2007. "Examining the global environmental impact of regional consumption activities -- Part 2: Review of input-output models for the assessment of environmental impacts embodied in trade," Ecological Economics, Elsevier, vol. 61(1), pages 15-26, February.
    23. Faye Duchin, 2005. "A world trade model based on comparative advantage with m regions, n goods, and k factors," Economic Systems Research, Taylor & Francis Journals, pages 141-162.

    More about this item

    Keywords

    International trade; world model; comparative advantage; linear programming;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F19 - International Economics - - Trade - - - Other

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