Research ArticleOpen AccessGoogle Scholar indexed
The Role of Intra-National Trade in Trade Theory
CERDI/CNRS, Universite Clermont-Auvergne, Clermont-Ferrand, France
Department of Economics, University of Macau, Macao, China
- 1 CERDI/CNRS, Universite Clermont-Auvergne, Clermont-Ferrand, France
- 2 Department of Economics, University of Macau, Macao, China
Theoretical Economics Letters·Volume 12 (2022)·Pages 1673–1692·Published 3 November 2022·DOI10.4236/tel.2022.126092
Copy link · social · email
Abstract
This paper explores the implications arising from the heterogeneous firm model for a theory of trade in which intranational trade is an intrinsic part, and international trade is its extension. Due to market competition, intra national trade dynamically leads to an increase in productivity heterogeneity across firms, which strengthens market selection and makes allocation more efficient. It also strengthens comparative advantage, and thus stimulates international trade.
KeywordsIntra-National and International TradeHeterogeneous Firm ModelMarket SelectionComparative Advantage
- Anderson, J. E., & van Wincoop, E. (2003). Gravity with Gravitas: A Solution to the Border Puzzle. The American Economic Review, 93, 170-192. https://doi.org/10.1257/000282803321455214
- Chaney, T. (2008). Distorted Gravity: The Intensive and Extensive Margins of International Trade. The American Economic Review, 98, 1707-1721. https://doi.org/10.1257/aer.98.4.1707
- Combes, P.-P., Mayer, T., & Thisse, J.-F. (2008). Economic Geography: The Integration of Regions and Nations. Princeton University Press.
- Dixit, A. K., & Sitlitz, J. E. (1977). Monopolistic Competition and Optimum Product Diversity. The American Economic Review, 67, 297-308.
- Eaton, J., & Kortum, S. (2002). Technology, Geography, and Trade. Econometrica, 70, 1741-1779. https://doi.org/10.1111/1468-0262.00352
- Fujita, M., Krugman, P., &Venables, A. J. (1999). The Spatial Economy: Cities, Regions, and International Trade. The MIT Press. https://doi.org/10.7551/mitpress/6389.001.0001
- He, Y. (2017). Intra-National Trade as Channels of Spillovers in Developing Countries. Journal of Economic Integration, 32, 358-399. https://doi.org/10.11130/jei.2017.32.2.358
- Helpman, E., Melitz, M. J., & Yeaple, S. R., (2004). Export versus FDI with Heterogeneous Firms. The American Economic Review, 94, 300-316. https://doi.org/10.1257/000282804322970814
- Hopenhayn, H. A. (1992). Entry, Exit, and Firm Dynamics in Long Run Equilibrium. Econometrica, 60, 1127-1150. https://doi.org/10.2307/2951541
- Krugman, P. R. (1979). Increasing Returns, Monopolistic Competition, and International Trade. Journal of International Economics, 9, 469-479. https://doi.org/10.1016/0022-1996(79)90017-5
- Krugman, P. R. (2015). Interregional and International Trade: Different Causes, Different Trends? In P. Nijkamp, A. Rose, & K. Kourtit (Eds.), Regional Science Matters (pp. 27-34). Springer. https://doi.org/10.1007/978-3-319-07305-7_3
- McCallum, J. (1995). National Borders Matter: Canada-U.S. Regional Trade Patterns. The American Economic Review, 85, 615-623.
- Melitz, M. J. (2003). The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71, 1695-1725. https://doi.org/10.1111/1468-0262.00467
- Melitz, M. J., & Redding, S. J. (2013). Firm Heterogeneity and Aggregate Welfare. CEP Discussion Paper No 1200. Centre for Economic Performance, London School of Economics and Political Science (LSE).