Increasing Returns and International Trade

Murray Kemp and Koji Shimomura

Review of International Economics, 2000, vol. 8, issue 4, 614-618

Abstract: The paper develops a model of international trade with increasing returns toscale by taking into account the possibility of cooperation among agents in an egalitarian economy. It is shown that each country gains from trade in a trading world in which there are arbitrary numbers of increasing‐returns‐to‐scale goods, constant‐returns‐to‐scale goods, factors of production, and countries.

Date: 2000
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