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This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural...
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This thesis deals with two theories of international trade: the theory of comparative advantage, which is connected to … the name David Ricardo and is dominating current trade theory, and Adam Smith’s theory of absolute advantage. Both … theories are compared and their assumptions are scrutinised. The former theory is rejected on theoretical and empirical grounds …
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