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.
Original language | English (US) |
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Pages (from-to) | 20-36 |
Number of pages | 17 |
Journal | Review of International Economics |
Volume | 7 |
Issue number | 1 |
DOIs | |
State | Published - Feb 1999 |