International trade and the division of labour

Kwok Tong Soo ()

No 100181706, Working Papers from Lancaster University Management School, Economics Department

Abstract: This paper develops a model of international trade based on the division of labour under perfect competition. International trade, by eliminating the duplication of coordination costs, leads to a greater variety of intermediate goods, each produced at a larger scale than in autarky. The greater variety of intermediate inputs implies greater division of labour and hence gains from trade. Similarly to models of international trade under imperfect competition, the volume of trade depends on the relative sizes of the trading partners. Extending the model to two factors of production yields the additional result that if the two countries are sufficiently similar in their relative endowments, then both factors of production can experience gains from trade.

Keywords: Division of labour; intermediate goods trade; trade liberalisation (search for similar items in EconPapers)
JEL-codes: F11 F15 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: International trade and the division of labor (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:lan:wpaper:100181706

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