Files

Action Filename Size Access Description License
Show more files...

Abstract

This document introduces some of the most influential trade theory models. It requires no advanced economic background and presents the frameworks by means of a descriptive approach. For the ease of the reader, most of the technicalities (equations and graphs) that traditionally describe the models are not reproduced and the focus is put on acquiring a good intuition of the different economic rationales for trade openness. The Ricardian and Heckscher-Ohlin models explain why trade emerges between countries with different relative technologies or factor endowments, respectively. The Helpman-Krugman model adds product variety and economies of scale to understand why similar countries also trade. The Melitz model lets firms vary in productivity in order to investigate why only a few of them enter the export market. The core-periphery model allows for migration to describe the localization of economic activity. The last section introduces the new paradigm of global value chains.

Details

Actions

Preview