 The Eaton–Kortum modelRobert Dekle and Monica Morlacco Chapter 36 in Elgar Encyclopedia of International Trade, 2026, pp 184-187 from Edward Elgar Publishing Abstract: The Eaton–Kortum (EK) model is a foundational framework in modern international trade theory and a widely used tool in empirical and theoretical research. Building on David Ricardo's theory of comparative advantage, it extends the analysis to a multi-country, multi-good setting using a probabilistic approach to technological heterogeneity and incorporating geographic barriers through iceberg trade costs. The model yields tractable expressions for prices, trade flows, and welfare, with its gravity-like structure linking welfare gains to observable trade shares and placing the trade elasticity at the center of empirical estimation and counterfactual analysis. Beyond trade, the EK model has influenced research in urban, labor, and environmental economics. This entry summarizes the model's structure, the patterns of trade it predicts, its welfare and gains-from-trade implications, its use in counterfactual exercises, and extensions that broaden its applicability to questions in economic geography, environmental policy, and labor markets. Keywords: Comparative advantage; Technological differences; Gravity equation; Welfare gains from trade; Trade elasticity; Trade counterfactuals (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:23076_37 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Chapters from Edward Elgar Publishing |
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