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Comparative Advantage, Geographic Advantage and the Volume of Trade

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  • Rauch, James E

Abstract

A functional relationship between the degree of a country's comparative advantage and the volume of its net exports of any good to its trading partner is established using a model with per-unit-distance transportation costs between countries' coasts and their interiors. The greater a country's comparative advantage, the deeper its exports penetrate geographically into its trading partner. The internal spatial structure of a country consists of cities on a river. It is shown that population sizes, wage rates, and residential rental rates are greatest in the port city and decline monotonically as one moves inland. Copyright 1991 by Royal Economic Society.

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  • Rauch, James E, 1991. "Comparative Advantage, Geographic Advantage and the Volume of Trade," Economic Journal, Royal Economic Society, vol. 101(408), pages 1230-1244, September.
    • Handle: RePEc:ecj:econjl:v:101:y:1991:i:408:p:1230-44
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    1. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
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    5. Patricia E. Beeson & Randall W. Eberts, 1987. "Identifying amenity and productivity cities using wage and rent differentials," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 16-25.
    6. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
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