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Regional Trade in a Purely Competitive Model

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  • Henry Thompson

Abstract

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.

Suggested Citation

  • Henry Thompson, 2013. "Regional Trade in a Purely Competitive Model," Auburn Economics Working Paper Series auwp2013-15, Department of Economics, Auburn University.
  • Handle: RePEc:abn:wpaper:auwp2013-15
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    File URL: http://cla.auburn.edu/econwp/Archives/2013/2013-15.pdf
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