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A Trade Model of Intermediate Products With Transportation Cost

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  • Kim Chong-Sup

Abstract

This paper presents a trade model of intermediate products where a country has the same production technology as the outside world, and the source of trade is the unbalance in the factor endowment. The decision as to how much to process the raw material before exporting depends on the capital requirements for the processing, and the change in transportation cost due to the processing. The lower the requirements of capital coupled with a more rapid fall in the transportation cost in the earlier stage of production, the more probable that the country will export the processed intermediate good instead of the raw material.

Suggested Citation

  • Kim Chong-Sup, 2002. "A Trade Model of Intermediate Products With Transportation Cost," International Economic Journal, Taylor & Francis Journals, vol. 16(3), pages 97-113.
    • Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:97-113
    DOI: 10.1080/10168730200000023
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    References listed on IDEAS

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    1. Hong, Wontack, 1970. "The Heckscher-Ohlin Theory of Factor Price Equalization and the Indeterminacy in International Specialization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(2), pages 328-333, June.
    2. Kalyan K. Sanyal & Ronald W. Jones, 2018. "The Theory of Trade in Middle Products," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 13, pages 203-231, World Scientific Publishing Co. Pte. Ltd..
    3. Avinash K. Dixit & Gene M. Grossman, 1982. "Trade and Protection with Multistage Production," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(4), pages 583-594.
    4. repec:bla:econom:v:50:y:1983:i:197:p:71-78 is not listed on IDEAS
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