We demonstrate that innovations in import and pivot goods usually cause the innovator’s trading partner to benefit and that few exceptions occur, and those mostly when the innovator has the larger economy or the higher per capita income. If the productivities of all goods in one country...

When consumers reallocate their spending on goods and expect their consumption to change proportionally, this expectation will not be fulfilled in a specialized equilibrium and the equilibria that follow it, with the result that one country’s income increases and the other country’s...