External Economies and International Trade Redux
We study a world with national external economies of scale at the industry level. In contrast to the standard treatment with perfect competition and two industries, we assume Bertrand competition in a continuum of industries. In this setting, many of the "pathologies" of the standard treatment disappear. There typically exists a unique equilibrium with trade guided by "natural" comparative advantage. And, when a country has CES preferences and any finite elasticity of substitution between goods, gains from trade are assured.
|Date of creation:||Oct 2008|
|Date of revision:|
|Publication status:||published as Gene M. Grossman & Esteban Rossi-Hansberg, 2010. "External Economies and International Trade Redux," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 829-858, May.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Henderson, J V, 1974.
"The Sizes and Types of Cities,"
American Economic Review,
American Economic Association, vol. 64(4), pages 640-56, September.
- Krugman, Paul, 1995. "Increasing returns, imperfect competition and the positive theory of international trade," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 24, pages 1243-1277 Elsevier.
- Vei-Lin Chan & Been-Lon Chen & Kee-Nam Cheung, 1995. "External Economies In Taiwan'S Manufacturing Industries," Contemporary Economic Policy, Western Economic Association International, vol. 13(4), pages 118-130, October.
- Henriksen, Espen & Steen, Frode & Ulltveit-Moe, Karen-Helene, 2001.
"Economies of Scale in European Manufacturing Revisited,"
CEPR Discussion Papers
2896, C.E.P.R. Discussion Papers.
- Henriksen, E & Knarvik, K.H.M. & Steen, F., 2001. "Economies of Scale in European Manufacturing Revisited," Papers 12/2001, Norwegian School of Economics and Business Administration-.
- Werner Antweiler & Daniel Trefler, 2000.
"Increasing Returns and All That: A View From Trade,"
NBER Working Papers
7941, National Bureau of Economic Research, Inc.
- Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
- Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365 Elsevier.
- Anas, Alex, 1992. "On the birth and growth of cities: : Laissez-faire and planning compared," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 243-258, June.
- Choi, Jai-Young & Yu, Eden S H, 2002. "External Economies in the International Trade Theory: A Survey," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 708-28, November.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
- R. C. O. Matthews, 1949. "Reciprocal Demand and Increasing Returns," Review of Economic Studies, Oxford University Press, vol. 17(2), pages 149-158.
- Frank D. Graham, 1923. "Some Aspects of Protection Further Considered," The Quarterly Journal of Economics, Oxford University Press, vol. 37(2), pages 199-227.
- Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, vol. 50(5), pages 1243-68, September.
- Grossman, Gene M. & Rossi-Hansberg, Esteban, 2011.
"Task trade between similar countries,"
Policy Research Working Paper Series
5819, The World Bank.
- Vernon Henderson & Anthony Venables, 2009. "Dynamics of city formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 233-254, April.
- Ricardo J. Caballero & Richard K. Lyons, 1989. "The Role of External Economies in U.S. Manufacturing," NBER Working Papers 3033, National Bureau of Economic Research, Inc.
- James R. Melvin, 1969. "Increasing Returns to Scale as a Determinant of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 2(3), pages 389-402, August.
- Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977.
"Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods,"
American Economic Review,
American Economic Association, vol. 67(5), pages 823-39, December.
- R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
- James R. Markusen & James R. Melvin, 1981. "Trade, Factor Prices, and the Gains from Trade with Increasing Returns to Scale," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 450-69, August.
- Caballero, Ricardo J. & Lyons, Richard K., 1990. "Internal versus external economies in European industry," European Economic Review, Elsevier, vol. 34(4), pages 805-826, June.
- John S. Chipman, 1970. "External Economies of Scale and Competitive Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 347-385.
- Io Segoura, 1998. "Return to scale and external economies: empirical evidence from Greek two-digit manufacturing industries," Applied Economics Letters, Taylor & Francis Journals, vol. 5(8), pages 485-490.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:14425. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.