Title
Increasing returns, product quality and international trade
Document Type
Journal article
Source Publication
Economica
Publication Date
1-1-2005
Volume
72
Issue
285
First Page
151
Last Page
169
Abstract
This paper examines the roles of quality and increasing returns in trade. It implies that there is intense intra-industry trade among economies with similar levels of per capita income, which increases both the quality and the quantity of consumption. However, there may be no trade in manufactured goods between rich and poor countries because of the disparity in their optimal qualities of consumption and the high complementarity of the qualities of intermediate goods in production. Thus, it helps explain the observed trade patterns. Moreover, the model shows that a smaller country is more likely to engage in international trade.
DOI
10.1111/j.0013-0427.2005.00406.x
Print ISSN
00130427
E-ISSN
14680335
Publisher Statement
Copyright © The London School of Economics and Political Science 2005
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Fan, C. S. (2005). Increasing returns, product quality and international trade. Economica, 72(285), 151-169. doi: 10.1111/j.0013-0427.2005.00406.x
