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Do Geographic Scale Economies Explain Disturbances to Heckscher-Ohlin Trade?

Posted: 29 Sep 1998

See all articles by Pamela J. D. Smith

Pamela J. D. Smith

University of Minnesota - College of Agricultural, Food and Environmental Sciences - Department of Applied Economics

Abstract

This paper examines whether "geographic scale economies" explain the trade that remains unexplained by the Heckscher-Ohlin model. The paper develops a theoretical specification that integrates geographic scale economies into the Heckscher-Ohlin model, and develops a statistical method for detecting geographic scale economies in the distributional features of a disturbance term. The units of analysis are US states. The findings reveal that empirical support for the Heckscher-Ohlin theory is improved by accounting for geographic scale economies within states; geographic scale economies do not generate differences in Rybczynski effects across states; and the scope of geographic scale economies is contained within states.

JEL Classification: F10, R12

Suggested Citation

Dressner Smith, Pamela Jane, Do Geographic Scale Economies Explain Disturbances to Heckscher-Ohlin Trade?. Available at SSRN: https://ssrn.com/abstract=115117

Pamela Jane Dressner Smith (Contact Author)

University of Minnesota - College of Agricultural, Food and Environmental Sciences - Department of Applied Economics ( email )

1994 Buford Avenue
St. Paul, MN 55108
United States
651-625-1712 (Phone)
651-625-2729 (Fax)

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