The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

International Trade, Empirical Approaches to

  • Stephen J. Redding
Reference work entry


This article reviews empirical research in international trade, which has undergone a resurgence since the mid-1980s. The article begins with traditional trade empirics, in which cross-country differences in opportunity costs of production (comparative advantage) are the basis for trade, before turning to new trade empirics, in which consumer love of variety and increasing returns to scale give rise to trade in similar goods between similar countries. More recent empirical research has emphasized heterogeneity across products within industries and across individual plants and firms, while other recent work has focused on the political economy of trade policy.


Autarky Bilateral trade Campaign contributions Canada–US Free Trade Agreement Comparative advantage Constant elasticity of substitution (CES) preferences Elasticity of substitution Endowments paradox Factor content of trade Factor endowments Factor price equalization Factor price equalization theorem Factor service trade General Agreement on Tariffs and Trade (GATT) Gravity equation Heckscher–Ohlin trade theory Hecksher–Ohlin theorem International trade International trade and heterogenous firms Intra-industry trade Japan, economics in Location of production Missing trade Most Favored Nation (MFN) principle Multilateral trade liberalization Neoclassical trade theory New trade theory Non-neutral technology differences Opportunity costs of production Outsourcing Political competition Protection Reciprocity Regional and preferential trade agreements Ricardo, D. Rybczynski theorem Skill-biased technical change Stolper–Samuelson theorem Vertical specialization Wage heterogeneity World Trade Organization (WTO) 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Stephen J. Redding
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