Increasing Returns and All That: A View from Trade

Werner Antweiler; Daniel Trefler

doi:10.1257/000282802760015621

American Economic Review Vol. 92 No. 1 2002

Increasing Returns and All That: A View from Trade

Werner Antweiler¹; Daniel Trefler²

¹ Faculty of Commerce and Business Administration, University of British Columbia, 2053 Main Mall, Vancouver, British Columbia V6T 1Z2, Canada. · ² Department of Economics, University of Toronto, 140 St. George Street, Suite 707, Toronto, Ontario M5S 3G6, Canada, and Canadian Institute for Advanced Research (CIAR).

Abstract

Do scale economies help to explain international trade flows? Using a large database on output, trade flows, and factor endowments, we find that allowing for the presence of increasing returns to scale in production significantly increases our ability to predict international trade flows. In particular, using trade data, we find that a third of all goods-producing industries are characterized by increasing returns to scale. Thus, scale economies are a quantifiable and important source of comparative advantage.

DOI: 10.1257/000282802760015621
Volume: 92
Issue: 1
Pages: 93-119
Language: en
Sources: openalex crossref bibtex:phds-export.bib

Increasing Returns and All That: A View from Trade

Abstract

Cite