Increasing Returns and All That: A View from Trade
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.
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Trade flows contain information about relative costs of production.
“The starting point of these papers, like ours, is that trade flows contain information about relative costs of production, a point also emphasized by Antweiler and Trefler (2002).”
From The Textbook Case for Industrial Policy: Theory Meets Data (2019) · cites this paper as Antweiler and Trefler (2002)
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The Textbook Case for Industrial Policy: Theory Meets Data
Bartelme, D., Costinot, A., Donaldson, D., & Rodríguez-Clare, A. (2019) · NBER Working Paper · doi:10.3386/w26193 · Cited by 114 · see citing works
- Authors
- Antweiler, W., & Trefler, D.
- Affiliations
- University of British Columbia (CA)
- Canadian Institute for Advanced Research (CA)
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2002-02-01
- Volume
- 92
- Issue
- 1
- Pages
- 93-119
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W3122933379
- Cited by
- 304
- References
- 0
- Citations by year
- 2026: 3 · 2025: 4 · 2024: 7 · 2023: 3 · 2022: 5 · 2021: 8 · 2020: 23 · 2019: 8 · 2018: 9 · 2017: 10 · 2016: 10 · 2015: 10 · 2014: 7 · 2013: 10 · 2012: 25
- FWCI
- 35.61
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- American Economic Review (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Global Trade and Competitiveness
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Technological Innovation
- Keywords
- increasing returns to scale, economies of scale, international trade flows, comparative advantage, factor endowments, production function, goods-producing industries
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