Can market size outweigh adverse comparative advantage?

Gottschalk, Sylvia ORCID: https://orcid.org/0000-0002-8629-7209 (2002) Can market size outweigh adverse comparative advantage? Journal of International Trade and Economic Development, 11 (1) . pp. 43-61. ISSN 0963-8199 [Article] (doi:10.1080/09638190110093154)

Abstract

This paper investigates the roles of comparative advantage and market size in the international location of manufacturing production. Building on the conventional Helpman and Krugman (1985) general equilibrium framework, our analysis extends the present literature by incorporating both effects in the same model, while allowing trade costs to vary almost continuously from autarky to free trade. The main result of our exercise is that market size effects offset comparative advantage if countries have similar factor proportions. A large country with a slight comparative disadvantage in manufacturing production may thus be a net exporter of manufactures. A small country with the same comparative disadvantage would be a net importer of manufactures.

Item Type: Article
Research Areas: A. > Business School > Economics
Item ID: 31936
Useful Links:
Depositing User: Sylvia Gottschalk
Date Deposited: 15 Feb 2021 21:41
Last Modified: 23 Nov 2021 10:33
URI: https://eprints.mdx.ac.uk/id/eprint/31936

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