Comparative Advantage and the Location of Production
Year: 2003
Type: article
Abstract: The paper returns to a familiar topic in international trade, comparative advantage, introducing it into Krugman's classic, core–periphery model of economic geography. This extra force of dispersion radically changes the stability properties of the model. Instead of the familiar result that trade liberalization leads to increased industrial concentration, lowering trade costs leads initially to increased concentration and then to dispersion of production. When a pattern of comparative advantage exists, integration may lead to international specialization of production. This may be good news for peripheral countries, which may be able to retain industry despite the attraction of the core.
Authors: Rikard Forslid, Ian Wooton
Institutions: Stockholm University, University of Glasgow
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1964968328