In this paper, we merge the heterogenous firm model of Melitz (2003) with the Ricardian model of Dornbusch, Fisher and Samuelson (DFS 1977) to explain how the pattern of international specialization and trade is determined by the interaction of comparative advantage, economies of scale, country sizes and trade barriers. The model is able to capture the existence of inter-industry trade and intr...

Using a simple general equilibrium model with two countries and two sectors including one manufacturing sector producing (vertically) differentiated products, we first show that an international barrier to trade in the manufacturing sector creates inter-industry trade, whereas an international barrier to trade in the other sector generates intra-industry trade among vertically differentiated pr...

The central paradigm of world trade patterns divides this into two elements. Trade between North and South is viewed as determined by traditional comparative advantage, largely determined by differences in endowment patterns. Trade within the North is viewed as determined by specialization due to economies of scale and product differentiation. In this paper, we will argue that this division is ...

cantly lower than the Euromonitor estimates suggest. Euromonitor states the source of its illicit trade estimates as “official statistics, trade associations, trade press, trade interviews, [and] Euromonitor International estimates”. However, the methodology and sources used by Euromonitor are not well-documented, and the discrepancies across editions call into serious question the sources of d...

This paper examines the effects of increased intra-industry trade on the labour market adjustment costs in Portugal’s automobile industry. Using a static and dynamic panel data approach, the results show a negative correlation between changes of employment and marginal intra-industry trade. These results confirm the smooth adjustment hypothesis, as well as suggesting that the multinational comp...

Pakistan’s economic ties with Turkey have improved in the past few years. A recently stated pledge to create a free trade agreement between Pakistan and Turkey is likely to trigger a further expansion of economic integration. This paper starts by reviewing trends in Pakistan’s bilateral trade with Turkey since 1996. Next, it estimates an augmented gravity model aiming to project Pakistan’s trad...