\s Applied International Trade Second Edition Harry P. Bowen McColl School of Business, Queens University of Charlotte, USA Abraham Hollander University of Montreal, Canada Jean-Marie Viaene ' Erasmus School of Economics, Erasmus University Rotterdam, The Netherlands CESifo, Germany, and the Tinbergen Institute, The Netherlands macmillan
Short contents List of figures x List of tables ; xiii Preface to the second edition v - xvi Glossary xix Acknowledgments xxi Parti 1 The structure of international trade and factor flows 2 2 Trade policy instruments and environment 43 Part II 3 The Ricardian framework 72 4 The factor abundance model 101" 5 Trade policy 136 6 Factor mobility and trade \ 179 7 The factor abundance theory in higher dimensions 205 Paft'III 8 Imperfect competition 254 9 Heterogeneous firms 287 10 Trade policy in imperfectly competitive markets : 312 11 Multinational production 348 Part IV 12 Economic integration ' 406 13 Exchange rates and international trade 440 14 Growth and international trade 463 Appendix: Data methods and sources 495 Bibliography 506 Index, 534
Contents List of figures x List of tables v xiii Preface to the second edition xvi Glossary xix Acknowledgments xxi Part I The trading world: patterns and policy Chapter 1 The structure of international trade and factor flows 2 1.1 A preview of trade theory 2 1.2 Patterns of international trade 5 1.3 International factor flows. 29 1.4 Concluding remarks \ 35 Appendix: Aggregate indices of trade overlap 37 Chapter 2 Trade policy instruments and environment 43 2.1 Instruments of trade policy 43 2.2 Administered protection and the WTO 56 2.3 Concluding remarks 66 Part II Competitive markets: trade and trade policy Chapter 3 The Ricardian framework 72 3.1 The principle of comparative cost advantage 73 3.2 The Ricardian model 74 3.3 Economies of scale 81 3.4 A continuum of goods 85 3.5 ' Technological heterogeneity, 89 3.6 Tests of the Ricardian trade theory 92 3.7 Concluding remarks '.' 96 Chapter 4 The factor abundance model 101 4.1 Production equilibrium 102 4.2 Specification of demand 116 4.3 Autarky and international equilibria 118 4.4 The factor abundance theorems 122 4.5 Concluding remarks 129 Appendix: The transformation curve 130
viii Contents J Chapter 5 Trade policy 5.1 Tariffs 5.2 Quantitative restrictions 5.3 Estimating welfare effects 5.4 Concluding remarks Appendix: Measures of welfare change 136 136 144 148 169 170 Chapter 6 Factor mobility and trade. 6.1 The gravity equation 6.2 Goods and factors: substitutes or complements? 6.3 International labor migration 6.4 The specific factors model " 6.5 Concluding remarks 179 179 183 188 193 199 Chapter 7 s The factor abundance theory in higher dimensions 7.1 Autarky equilibrium with / goods and H factors 7.2 Generalized law of comparative advantage 7.3 Factor abundance and trade 7.4 Testing the factor abundance model 7.5 The Stolper-Samuelson and Rybczynski theorems 7.6 Factor price equalization 7.7 Concluding remarks 205 205 207 209 218 232 237 243 Part III Imperfectly competitive markets: trade and trade policy Chapter 8 Imperfect competition 8.1 Market power and the gains from trade 8.2 Product differentiation and intra-industry trade 8.3 Factor endowments and monopolistic competition 8.4 Concluding remarks Appendix: Monopolistic competition with Dixit-Stiglitz preferences 254 255 264 269 278 280 Chapter 9 Heterogeneous firms 9.1 The Melitz (2003) model and extensions 9.2 Endogenous mark-ups 9.3 Endogenous comparative advantage 9.4 The diversity of export destinations 9.5 Measuring the impact of trade costs 9.6 Concluding remarks 287 288 295 299 304 306 308 Chapter 10 Trade policy in imperfectly competitive markets 10.1 Rivalry in a single market 10.2 Extensions. 10.3 Rivalry across markets 10.4 Quantitative restrictions 10.5 Contingent protection 10.6 Concluding remarks 312 313 322 324 330 336 340
[Contents ix Chapter 11 Multinational production 11.1 Measuring multinational activity 11.2 Why multinational? The OLI framework 11.3 Oligopolistic interaction 11.4 Endowments and the fragmentation of production 11.5 The knowledge-capital model 11.6 Heterogeneous firms: exporting versus FDI 11.7 A multi-country setting 11.8 Endowments and intra-firm trade 11.9 Intra-firm trade and outsourcing: the evidence 11.10 Concluding remarks \ 348 349 351 359 362 370 375 377 383 391 394 Part IV Chapter 12 Chapter 13 Chapter 14 Appendix Special topics Economic integration 12.1 Basic concepts 12.2 Rationale for trade agreements 12.3 Regionalism versus multilateralism 12.4 Factor markets 12.5 Empirics of integration 12.6 Concluding remarks Exchange rates and international trade 13.1 Trade and exchange rate volatility 13.2 The choice of the invoice currency 13.3 Prices and exchange rates 13.4 Hysteresis 13.5 Concluding remarks Growth and international trade 14.1 Preliminaries 14.2 The Harrod-Domar model 14.3 The neoclassical model 14.4 Two-sector, models 14.5 Endogenous growth 14.6 Growth empirics 14.7 Concluding remarks Data methods and sources A.I Trade-flow data A.2 Industry characteristics A.3 Country characteristics A.4 Other international data and sources Bibliography Index 406 407 413 419 423 430 432 440 441 445 450 453 456 463 464 465 468 475 479 483 489 495 495 499 501 504 506 534