TY - UNPB

T1 - The gains from trade in intermediate goods

T2 - a Ricardo-Sraffa-Samuelson model

AU - Soo, Kwok Tong

PY - 2014

Y1 - 2014

N2 - This paper develops a model of intermediate and final goods trade based on comparative advantage. Firms endogenously decide whether to produce a final good directly using labour, or indirectly using both labour and intermediate inputs. It is shown that the gains from trade in intermediate and final goods exceeds that from trade in final goods alone. Allowing for decreasing trade and coordination costs results in an endogenous change in the structure of production towards a more fragmented structure, with corresponding implications for trade patterns.

AB - This paper develops a model of intermediate and final goods trade based on comparative advantage. Firms endogenously decide whether to produce a final good directly using labour, or indirectly using both labour and intermediate inputs. It is shown that the gains from trade in intermediate and final goods exceeds that from trade in final goods alone. Allowing for decreasing trade and coordination costs results in an endogenous change in the structure of production towards a more fragmented structure, with corresponding implications for trade patterns.

KW - Intermediates trade

KW - Comparative advantage

KW - Structure of production

M3 - Working paper

T3 - Economics Working Paper Series

BT - The gains from trade in intermediate goods

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -