Abstract
The previous chapter proposed a trade model with economic structure and endogenous capital. We treated human capital as exogenous variables. This chapter is also concerned with trade and economic structures. We propose a dynamic two- country and multi-sector model with endogenous knowledge accumulation. The model describes a dynamic interdependence between knowledge utilization and creation, international division of labor, land rent and price structure over space under perfect competition. We examine how differences in knowledge utilization and creativity between the two countries may affect the economic geography. It is shown that the economic system may have either a unique or multiple equilibria and each equilibrium may be either stable or unstable, depending on the knowledge utilization and creativity of the production sectors in the two countries. We also examine effects of changes in some parameters on the economic geography.
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© 2000 Springer-Verlag Berlin Heidelberg
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Zhang, WB. (2000). A Multi-Sector Trade Model with Endogenous Knowledge. In: A Theory of International Trade. Lecture Notes in Economics and Mathematical Systems, vol 482. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-18144-3_11
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DOI: https://doi.org/10.1007/978-3-642-18144-3_11
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-66917-3
Online ISBN: 978-3-642-18144-3
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