NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Comparative Advantage, Geographic Advantage, and the Volume of Trade

James E. Rauch

NBER Working Paper No. 3512
Issued in November 1990
NBER Program(s):   ITI   IFM

A functional relationship between the degree of a country?s comparative advantage in any good and the volume of its net exports of that good to its trading partner is established using a model with per-unit-distance transportation costs between countries' coasts and their interiors. The greater a country's comparative advantage, the greater the transportation cost it can overcome and hence the deeper its exports can penetrate geographically into its trading partner. The internal spatial structure of a country is modeled using cities as the basic spatial units. It is shown that the city closest to the coast will be the largest and have the highest wage rate and residential rental rates, and that population sizes, wage rates, and residential rental rates of cities all fall as one moves inland.

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Document Object Identifier (DOI): 10.3386/w3512

Published: Economic Journal, Vol. 101, pp. 1230-1244, (September 1991).

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