Abstract
The world consists of two countries (or regions: henceforth we shall use ‘region’ and ‘country’ interchangeably), North and South, assumed to be identical in technology, endowments, and preferences. Both countries produce two kinds of commodities: an agricultural good (produced under constant returns to scale with labour as the sole input) and a variety of manufacturing goods (produced under increasing returns to scale using labour and intermediate goods). Manufacturing goods can be used both as final goods by consumers and as intermediate goods in the manufacturing sector.
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References
Gandolfo, G. (2009). Economic dynamics.
Krugman, P. R., & Venables, A. J. (1995). Globalization and the inequality of nations.
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Gandolfo, G. (2014). Appendix to Chapter 17. In: International Trade Theory and Policy. Springer Texts in Business and Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-37314-5_31
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DOI: https://doi.org/10.1007/978-3-642-37314-5_31
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