Notes on Competitive Trade Theory

Table of Contents

I. Introduction: Micro Foundations                                                2
II. Reciprocal Demand and the World Trading Equilibrium  24
III. The Ricardian Model                                                               44
IV. The Heckscher-Ohlin-Samuelson Model                           52
V. The Specific Factors Model                                                    70
VI. Policy in the Perfectly Competitive World                            80

These notes synthesize contributions from a wide spectrum of writers concerning competitive trade models. They
bear the mark of two of my own teachers, Jagdish Bhagwati and Ron Findlay, as well as writings too numerous to
note here. The reader may also like to consult the excellent texts by R. Caves, R. Jones, and J. Frankel, World Trade
and Payments, or that by P. Krugman and M. Obstfeld, International Economics: Theory and Policy. More
advanced treatments of many of the topics may be found in J. Bhagwati, Arvind Panagariya, and T.N. Srinivasan,
Lectures on International Trade, or E. Helpman and P. Krugman, Market Structure and Foreign Trade.