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Monopolistic Competition With Efficiency Gaps And A Heckscher‐Ohlin Trade Pattern

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  • TORU KIKUCHI
  • KOJI SHIMOMURA

Abstract

We develop a two‐factor, three‐sector model of international trade in which the monopolistically competitive firms are characterized by different fixed production costs. We show that, depending on the pattern of the international distribution of factor endowments, the trade pattern is determined not only by relative factor endowments as suggested by Heckscher and Ohlin, but also by absolute factor endowments via a mechanism of competitive selection in the monopolistically competitive sector.

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  • Toru Kikuchi & Koji Shimomura, 2006. "Monopolistic Competition With Efficiency Gaps And A Heckscher‐Ohlin Trade Pattern," The Japanese Economic Review, Japanese Economic Association, vol. 57(3), pages 426-437, September.
    • Handle: RePEc:bla:jecrev:v:57:y:2006:i:3:p:426-437
    DOI: 10.1111/j.1468-5876.2006.00321.x
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    Cited by:

    1. Kikuchi, Toru & Shimomura, Koji, 2007. "Monopolistic competition with cross-country technological differences and international trade," Japan and the World Economy, Elsevier, vol. 19(2), pages 236-247, March.

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