In a classical world where prices of both northern manufactures and southern raw materials are determined by market demand and supply, technical progress in one region leads to a terms-of-trade improvement of the other region irrespective of whether technical progress is labor-saving or...

This paper builds a general equilibrium trade model where a country produces two traded goods and one non-traded public consumption good. The government finances the provision of the public good by taxing the incomes of factors of production, and or by imposing tariffs. Within this framework,...