INTERNATIONAL TRADE W. J. Ethier April 2010 Textbooks: Feenstra, Advanced International Trade (Princeton, 2004). (denoted F below). Ethier, MODERN INTERNATIONAL ECONOMICS, 3rd edition, 1995 (denoted ETH below). Useful: Kierzkowski, Henryk (ed), MONOPOLISTIC COMPETITION AND INTERNATIONAL TRADE, 1984 (KIER). Grossman, Gene (ed), IMPERFECT COMPETITION AND INTERNATIONAL TRADE, 1992 (GROSS). Neary, J. Peter (ed), INTERNATIONAL TRADE, 1995 [Elgar: Aldershot] (NEARY). The best collection of useful articles, but very expensive. P. Kenen and R. Jones, HANDBOOK OF INTERNATIONAL ECONOMICS, Volume I, 1984 (HAND). G. M. Grossman and K. Rogoff, HANDBOOK OF INTERNATIONAL ECONOMICS, Volume III, 1995 (HAND III). Helpman, E. and P. R. Krugman, MARKET STRUCTURE AND FOREIGN TRADE. Cambridge: MIT Press (1985) (HK).
Reading List This reading list is given for reference only. The course requirements are simply what is covered in class. Whenever any readings also become requirements, that will be explicitly mentioned in class at the relevant part of the course. PART A: WHY TRADE? I. Comparative Advantage A. The Gains from Trade F: pp 174-191. Ohyama, Trade and Welfare in General Equilibrium, KEIO ECONOMIC STUDIES, 1972. In NEARY. Symposium on the Gains from Trade, JOURNAL OF INTERNATIONAL ECONOMICS (May 1972). [See in particular the papers by Grandmont and McFadden and by Otani.] B. The Basic Theory of Comparative Advantage F: pp 1-4. Jones, Comparative Advantage and the Theory of Tariffs: A Multi-Country, Multi-Commodity Model. Deardorff, The General Validity of the Law of Comparative Advantage, JOURNAL OF POLITICAL ECONOMY, 88, 1980 (941-57). In NEARY. ETH, pp A3 - A13. C. The General Equilibrium of International Trade ETH, pp A13 - A18. 2
D. Applied Aspects Glejser, H., Empirical Evidence on Comparative Cost Theory from the European Common Market Experience, EUROPEAN ECONOMIC REVIEW, 1972. Bernhofen, D., A direct test of the theory of comparative advantage: the case of Japan (with J. Brown), 2004, JOURNAL OF POLITICAL ECONOMY 112(1), 48-67. II. Economies of scale Ethier, Decreasing Costs in International Trade and Frank Graham's Argument for Protection, ECONOMETRICA 50, 1982, pp 1243-68. In NEARY. Markusen, J. and J. Melvin, The Gains-from-Trade Theorem with Increasing Returns to Scale, ch 2 in KIER. Matthews, Reciprocal Demand and Increasing Returns, REVIEW OF ECONOMIC STUDIES, 1949/50. Ethier, Internationally Decreasing Costs and World Trade, JOURNAL OF INTERNA- TIONAL ECONOMICS, February 1979, pp 1-24. In NEARY. III. Imperfect Competition A. The Basic Theory Markusen, J. Trade and Gains from Trade with Imperfect Competition, JOURNAL OF INTERNATIONAL ECONOMICS 11, 1981, pp 531-51. Helpman, E. and P. R. Krugman, HK, Chapter 5. B. Applied Aspects F: chapter 5. Cox, D. and R. Harris, Trade Liberalization and Industrial Organization: Some Estimates for Canada, JOURNAL OF POLITICAL ECONOMY, 93 (1985), pp 115-45. 3
Helpman, Elhanan, Imperfect Competition and International Trade: Evidence from 14 Industrial Countries, JOURNAL OF THE JAPANESE AND INTERNATIONAL ECONOMIES 1, 1987, pp 62-68. In NEARY. Hummels, David and James Levinsohn, Monopolistic Competition and International Trade: Reconsidering the Evidence, QUARTERLY JOURNAL OF ECONOMICS 110, 1995, pp 799-836 PART B: THE FACTOR-ENDOWMENTS THEORY I. The Heckscher-Ohlin-Samuelson Model A. The Basic Theorems ETH, pp A-18 - A-38. F: chapter 1. Ohlin, INTERREGIONAL AND INTERNATIONAL TRADE, Ch 1, 2, 3, 4, 9. B. Empirical Tests F: chapter 2. HAND, Ch 10. HAND III, Ch 3. Leamer, SOURCES OF INTERNATIONAL COMPARATIVE ADVANTAGE: THEORY AND EVIDENCE. Cambridge: MIT, 1984. II. Extensions and Elaborations of the Basic Theory A. Many Goods and Factors Samuelson, Prices of Factors and Goods in General Equilibrium, REVIEW OF ECO- NOMIC STUDIES, October 1953. In NEARY. HAND, Ch 3. Vanek, The Factor Proportions Theory: The N-Factor Case, KYKLOS, October 1968. 4
B. Intra-industry Trade F: chapter 5 (again). Ethier, National and International Returns to Scale in the Modern Theory of International Trade, AMERICAN ECONOMIC REVIEW, June 1982, pp 389-405. In GROSS. Helpman and Krugman, HK, 1985, Part III. C. Specific Factors ETH, pp A26 - A28. Mayer, Short-Run and Long-Run Equilibrium for a Small Open Economy, JOURNAL OF POLITICAL ECONOMY, 1978. 5