Abstract
The theory of international trade has been extended in recent years to deal with intra-industry trade.2 These extensions aim to explain certain facts about existing trade patterns, which cannot be explained by the traditional comparative costs theory (Ricardo) and the traditional relative factor abundance theory (Heckscher-Ohlin). They are based on the existence of product differentiation, economies of scale and monopolistic competition. They provide an explanation of trade which is complementary to the traditional views and it has, indeed, been shown by several authors that both explanations can coexist in extended models of international trade (see Helpman, 1984, for a review of this literature).
Financial support from the Foerder Institute for Economic Research is gratefully acknowledged. The first version of this paper was written in 1981.
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References
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Other references are given in the Helpman paper.
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© 1985 International Economic Association
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Helpman, E. (1985). International Trade in Differentiated Middle Products. In: Jungenfelt, K., Hague, D. (eds) Structural Adjustment in Developed Open Economies. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-17919-0_1
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DOI: https://doi.org/10.1007/978-1-349-17919-0_1
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