Comparative Advantage and Trade Liberalization in a Chamberlinian-Ricardian Model

Kikuchi, Toru and Shimomua, Koji (2008): Comparative Advantage and Trade Liberalization in a Chamberlinian-Ricardian Model. Unpublished.

Abstract

The present note shows the interaction between technological differences between countries and the level of trade costs as a determinant of trade patterns. It takes the work of Kikuchi et al.(2008)'s Chamberlinian-Ricardian model as its point of departure, and extends the analysis to include both a continuum of industries, as did Dornbusch et al. (1977), and iceberg transport costs. It will be shown that trade liberalization drastically changes the nature of trade patterns, particularly the emergence of intra-industry trade.

• Item Type: MPRA Paper
• Language: English
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies

References

Dixit, A. K., and J. E. Stiglitz (1977) ‘Monopolistic Competition and Optimum Product Diversity,’ American Economic Review 67, 297-308.

Dornbusch, R., Fischer, S., and Samuelson, P. (1977) ‘Comparative Advantage, Trade and Payments in a Ricardian Model with a Continuum of Goods,’ American Economic Review 67, 823-829.

Helpman, E. (1981) ‘International Trade in the Presence of Product Differentiation, Economies of Scale and Monopolistic Competition: A Chamberlin-Heckscher-Ohlin Approach,’ Journal of International Economics 11, 305-340.

Helpman, E., and P. R. Krugman (1985) Market Structure and Foreign Trade, MIT Press, Cambridge MA.

Kikuchi, T., K. Shimomura, and D.-Z. Zeng (2008) ‘On Chamberlinian-Ricardian Trade Patterns,’ forthcoming in Review of International Economics.

Krugman, P. R. (1979) ‘Increasing Returns, Monopolistic Competition, and International Trade,’ Journal of International Economics 9, 469-479.

Neary, J. P. (2003) ‘Competitive versus Comparative Advantage,’ The World Economy 26, 457-470.