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The volume of trade in the smallest Heckscher-Ohlin model

Research output: Working paper

Published
Publication date2005
Place of PublicationLancaster University
PublisherThe Department of Economics
<mark>Original language</mark>English

Publication series

NameEconomics Working Paper Series

Abstract

This paper develops the smallest model of international trade based on differences in factor endowments across countries. We use this model to clarify the result in Helpman and Krugman (1985) that relative country size does not matter for the volume of trade. Relative country size does matter for the volume of trade, holding relative endowments and the size of the world economy constant.