A World Trade Model Based on Comparative Advantage with m Regions, n Goods, and k Factors.

This paper describes the World Trade Model, a linear program that determines world prices, scarcity rents, and international trade flows based on comparative advantage in a world economy with m regions, n goods, and k factors. Major properties of the model are demonstrated, including the sources of the gains from trade for the world as a whole and for individual regions. Preliminary empirical results are reported for a 10-region, 8-good, 3-factor model of the world economy. The new model generalizes the World Model of Leontief, Carter, and Petri in ways which make it particularly useful for analyzing scenarios about sustainable development.