Interdisciplinary Information Sciences
Online ISSN : 1347-6157
Print ISSN : 1340-9050
ISSN-L : 1340-9050
Regular Papers
Trade and the Location of Two Industries: A Two-Factor Model
Yiming ZHOUChutokuro IMAIZUMITatsuhito KONODao-Zhi ZENG
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2016 Volume 22 Issue 1 Pages 1-15

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Abstract

We study a two-country two-factor model with free entry and monopolistic competition. There are two industries employing immobile labor as fixed input and mobile capital as marginal input. Firms cannot move across countries, but only move across industries within a country. The two industries can differ in three aspects: factor intensities, transport costs and demand elasticities. The two countries are identical except for size. The production specialization and trade pattern are the results of the interaction of two effects: the market access effect and the wage differential effect.

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© 2016 by the Graduate School of Information Sciences (GSIS), Tohoku University
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