@techreport{NBERw14425,
 title = "External Economies and International Trade Redux",
 author = "Gene M. Grossman and Esteban Rossi-Hansberg",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "14425",
 year = "2008",
 month = "October",
 URL = "http://www.nber.org/papers/w14425",
 abstract = {We study a world with national external economies of scale at the industry level. In contrast to the standard treatment with perfect competition and two industries, we assume Bertrand competition in a continuum of industries. In this setting, many of the "pathologies" of the standard treatment disappear. There typically exists a unique equilibrium with trade guided by "natural" comparative advantage. And, when a country has CES preferences and any finite elasticity of substitution between goods, gains from trade are assured.},
}