ENDOGENOUS VS EXOGENOUS COMPARATIVE ADVANTAGE AND ECONOMIES OF SPECIALIZATION VS ECONOMIES OF SCALE

This paper draws the distinctions between the concepts of endogenous a nd exogenous comparative advantages and between the concepts of econom ies of specialization and scale. A comparison between the equilibrium model endogenizing the degree of specialization and endogeneous compar ative advantages, neoclassical trade model with exogeneous comparative advantages, and an extended Dixit-Stiglitz model with a tradeoff betw een economies of scale and transaction costs is used to explore the eq uilibrium implications of the distinctions.