A World Trade Model with Bilateral Trade Based on Comparative Advantage
نویسندگان
چکیده
This paper describes an extension of Duchin’s World Trade Model to include the explicit representation of transportation costs, permitting the endogenous determination of bilateral trade flows and region-specific prices. The original model is a linear program that, based on comparative advantage and the minimization of factor use, determines regional production and trade flows as well as world prices and scarcity rents for m regions, n good, and k factors. The new World Trade Model with Bilateral Trade achieves its objectives by introducing trans-
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