Kichko, Sergey; Kokovin, Sergey; Zhelobodko, Evgeny - In: Journal of International Economics 94 (2014) 1, pp. 129-142
We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of substitution. Firms' profits and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively...