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Domestic Demand, Comparative Advantage, and the Pattern of Trade

Rolf Weder

Swiss Journal of Economics and Statistics (SJES), 1995, vol. 131, issue III, 377-388

Abstract: Case studies indicate that differences in domestic demand among countries are important determinants of the pattern of trade. This paper discusses how the observed relationship between demand and trade is part of and could be integrated into international trade theory. It is argued that the "new" trade theory is a better candidate to account for the empirical observations, even though the Ricardian principle of comparative advantage seems to hold.

Date: 1995
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Handle: RePEc:ses:arsjes:1995-iii-7