A Ricardian Model with a Continuum of Goods under Nonhomothetic Preferences: Demand Complementarities, Income Distribution, and North‐South Trade

@article{Matsuyama2000ARM,
  title={A Ricardian Model with a Continuum of Goods under Nonhomothetic Preferences: Demand Complementarities, Income Distribution, and North‐South Trade},
  author={Kiminori Matsuyama},
  journal={Journal of Political Economy},
  year={2000},
  volume={108},
  pages={1093 - 1120}
}
  • K. Matsuyama
  • Published 1 December 2000
  • Economics
  • Journal of Political Economy
This paper develops a Ricardian model of trade in which goods are indexed according to priority and higher‐indexed goods are consumed only by richer households. South (North) has a comparative advantage in lower‐ (higher‐) indexed goods and, hence, specializes in goods with lower (higher) income elasticities of demand. Product cycles and a southern terms‐of‐trade deterioration result from faster population growth and uniform productivity growth in South and a global productivity improvement… 
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