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Title: |
A Trade Model of Intermediate Products with
Transportation Cost |
| Author: |
Kim, Chong-Sup |
| Author
Affiliation: |
Sogang U |
| Source: |
International Economic Journal, Autumn 2002, v. 16, no. 3, pp. 97-113 |
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Publication Date: |
Autumn 2002 |
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Abstract: |
This paper
presents a trade model of intermediate products where a country has the
same production technology as the outside world, and the source of trade
is the unbalance in the factor endowment. The decision as to how much to
process the raw material before exporting depends on the capital
requirements for the processing, and the change in transportation cost
due to the processing. The lower the requirements of capital coupled
with a more rapid fall in the transportation cost in the earlier stages
of production, the more probable that the country will export the
processed intermediate good instead of the raw material. |
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