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Trade Between Similar Countries: The Role of Credit Market Imperfection

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  • Marjit, Sugata

Abstract

We build up a simple Ricardian trade model with imperfection in the market for credit which affects the pattern of production. Workers/entrepreneurs are endowed with different levels “capital” and need to borrow to produce the credit intensive good. We argue that in such a framework identical countries will gain from trade without the assumption of comparative advantage.

Suggested Citation

  • Marjit, Sugata, 2012. "Trade Between Similar Countries: The Role of Credit Market Imperfection," MPRA Paper 41935, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41935
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    File URL: https://mpra.ub.uni-muenchen.de/41935/1/MPRA_paper_41935.pdf
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    References listed on IDEAS

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    1. Ronald Findlay, 1995. "Factor Proportions, Trade, and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061759, December.
    2. Alan V. Deardorff, 2001. "International Provision of Trade Services, Trade, and Fragmentation," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 233-248, May.
    3. Ronald W. Jones & Sugata Marjit, 2018. "The Role of International Fragmentation in the Development Process," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 15, pages 255-261, World Scientific Publishing Co. Pte. Ltd..
    4. repec:fth:michin:463 is not listed on IDEAS
    5. Kiminori Matsuyama, 2005. "Credit Market Imperfections and Patterns of International Trade and Capital Flows," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 714-723, 04/05.
    6. Findlay, Ronald, 1984. "Growth and development in trade models," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 4, pages 185-236, Elsevier.
    7. Marjit, Sugata, 1987. "Trade in Intermediates and the Colonial Pattern of Trade," Economica, London School of Economics and Political Science, vol. 54(214), pages 173-184, May.
    8. Sanyal, Kalyan K, 1983. "Vertical Specialization in a Ricardian Model with a Continuum of Stages of Production," Economica, London School of Economics and Political Science, vol. 50(197), pages 71-78, February.
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    Cited by:

    1. Meghna Dutta & Niladri Sekhar Dhar, 2021. "Property Rights Documentation in Determining Credit Availability for Informal Firms: A Study of Indian Firms," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(1), pages 123-138, March.

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    More about this item

    Keywords

    Trade; Credit Market; Gains from Trade;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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