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Regional Trade in a Purely Competitive Model

Listed author(s):
  • Henry Thompson

This paper develops a competitive model of trade between three countries with constant cost production and identical utility functions. Trade depends on country size and productivity, and may be limited to two of the countries. Regional trade is observed if they happen to be closer together. The two countries trading only with each other avoid export competition. A country is excluded from trade if it has too little production potential. In the model with three goods, trade is limited to two countries unless each ranks highest in production potential for a unique good.

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File URL: http://cla.auburn.edu/econwp/Archives/2013/2013-15.pdf
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Paper provided by Department of Economics, Auburn University in its series Auburn Economics Working Paper Series with number auwp2013-15.

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Date of creation: Sep 2013
Handle: RePEc:abn:wpaper:auwp2013-15
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Web page: http://cla.auburn.edu/economics/

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  1. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-1125, December.
  2. Esteban Rossi-Hansberg, 2005. "A Spatial Theory of Trade," American Economic Review, American Economic Association, vol. 95(5), pages 1464-1491, December.
  3. Jonathan Eaton & Samuel Kortum, 2012. "Putting Ricardo to Work," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 65-90, Spring.
  4. Harry G. Johnson, 1953. "Optimum Tariffs and Retaliation," Review of Economic Studies, Oxford University Press, vol. 21(2), pages 142-153.
  5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
  6. Hamilton, Bob & Whalley, John, 1983. "Optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements," Journal of International Economics, Elsevier, vol. 15(3-4), pages 323-348, November.
  7. Fernandez, Raquel & Portes, Jonathan, 1998. "Returns to Regionalism: An Analysis of Nontraditional Gains from Regional Trade Agreements," World Bank Economic Review, World Bank Group, vol. 12(2), pages 197-220, May.
  8. John Kennan & Raymond Riezman, 2013. "Optimal Tariff Equilibria with Customs Unions," World Scientific Book Chapters,in: International Trade Agreements and Political Economy, chapter 5, pages 53-66 World Scientific Publishing Co. Pte. Ltd..
  9. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-837, December.
  10. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
  11. John Whalley, 1998. "Why Do Countries Seek Regional Trade Agreements?," NBER Chapters,in: The Regionalization of the World Economy, pages 63-90 National Bureau of Economic Research, Inc.
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