A Ricardian Model of New Trade and Location Theory

Luca Ricci

Journal of Economic Integration, 1997, vol. 12, 47-61

Abstract: This paper provides a new model of firm’s location choices. It integrates a Ricardian model of comparative advantage with the location effects deriving from trade costs, increasing returns to scale, product dif ferentiation, and monopolistic competition. In a two-region, two-differentiated-good, one-factor framework, the regional degree of specialization depends positively on the extent of the comparative advantage in productivity and on the degree of returns to scale; it depends negatively on the magnitude of the trade costs. Hence, the model accommodates high levels of intra-industry trade among countries with similar level of development, as well as high levels of interindustry trade among countries with different technologies.

Keywords: Ricardian; Model (search for similar items in EconPapers)
JEL-codes: F11 F12 F15 L13 R12 (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0038

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