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Trade and Factor Mobility with Increasing Returns to Scale

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  • J.V. Henderson

    (Queen's University)

Abstract

This paper examines equilibrium and changes in equilibrium in international trade under conditions of increasing returns to scale in production. The first section of the paper solves for stable equilibrium positions between two trading partners; the reader should find this section a refinement and development of Matthews(1950) work. The second section discusses inter-country and intra-country factor mobility and examines various equilibrium and welfare positions. The role of increasing returns to scale in urban and regional production as opposed to their role in international trade is discussed. Also, the concept of equilibrium unemployment is examined. Finally the Stolper-Samuelson and Ryczynski theorems are re-evaluated for increasing returns to scale in a brief summary emphasizing the economic interpretation of the results in Jones(1968).

Suggested Citation

  • J.V. Henderson, 1972. "Trade and Factor Mobility with Increasing Returns to Scale," Working Paper 62, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:62
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    References listed on IDEAS

    as
    1. Horst Herberg & Murray C. Kemp, 1969. "Some Implications of Variable Returns to Scale," Canadian Journal of Economics, Canadian Economics Association, vol. 2(3), pages 403-415, August.
    2. 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.
    3. John S. Chipman, 1970. "External Economies of Scale and Competitive Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 347-385.
    4. J. Vernon Henderson, 1972. "Increasing Returns to Scale, Free Trade, and Factor Mobility: A Note on Equilibrium," Canadian Journal of Economics, Canadian Economics Association, vol. 5(2), pages 293-298, May.
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