A theory of a wealth maximizing, capital accumulating, price taking firm facing adjustment costs and operating in the presence of disembodied and price-induced technical progress is developed. The testable implications of the extended theory are derived under mild assumptions and are thus...

Empirical spatial models of trade that are based on a mathematical programming specification often exhibit a large discrepancy between the equilibrium solution and the observed demand, supply and levels of trade flows among countries. This discrepancy may be due to several causes. Assuming,...