Chapter 3 Comparative Advantage and Trade Liberalization in a Chamberlinian–Ricardian Model

Abstract

Purpose – The present note shows the interaction between technological differences between countries and the level of trade costs as a determinant of trade patterns.

Methodology/approach – It takes the work of Kikuchi et al.'s (2008) 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.

Findings – It will be shown that trade liberalization drastically changes the nature of trade patterns, particularly the emergence of intra-industry trade.

Originality/value – This present model extends the Chamberlinian–Ricardian model to include positive trade costs.

Citation

Kikuchi, T. and Shimomura, K. (2008), "Chapter 3 Comparative Advantage and Trade Liberalization in a Chamberlinian–Ricardian Model", Tran-Nam, B., Van Long, N. and Tawada, M. (Ed.) Globalization and Emerging Issues in Trade Theory and Policy (Frontiers of Economics and Globalization, Vol. 5), Emerald Group Publishing Limited, Leeds, pp. 29-35. https://doi.org/10.1016/S1574-8715(08)05003-3