$53deb5 !>db19>4ecdbi 5d5b?75>59di9>+b145%?45 +85 5 #be7=1>=?459f5bc17

19
Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare (http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

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Page 1: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 2: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 3: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 4: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

Ω

ωω σ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 5: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕϕ

ϕϕ

ϕ π ϕ

ϕρϕ

ϕ σ ρϕ σ

ϕ ϕ ϕ ρϕ σ

π ϕσ

ϕ

ϕ ϕϕ

δ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 6: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ π ϕ

ϕ∞

∑ δ π ϕδ

π ϕ

ϕϕ ϕ ϕ

π (ϕ)

ϕ σ−1

-f

0

(ϕ *)σ−1

-fx

(ϕx*)σ−1

πx(ϕ)

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 7: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ

μ ϕ

μ ϕϕ

ϕϕ ϕ

ϕ ϕ∞

ϕσ μ ϕ ϕσ

ϕ

ϕϕσ ϕ ϕ

σ

π∞

π ϕ μ ϕ ϕ π ϕ

πϕ

σ

ϕ ϕ

ϕ

σ ϕ

σ

ϕ ϕ

ϕ

σ

π ϕ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 8: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

∞ϕ ϕ ϕ π

δ

ϕπ

ϕϕ π

ϕ π δ ϕ ∞ π ϕ ∞

π

π ϕ

π ϕ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 9: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ π

ϕ

ϕ ϕϕ ϕ σ

σ ϕ

ϕϕσ ϕ σ ϕ ϕ

ϕ

ϕ ϕ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 10: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ π

σ

ω Ω

ω σ ω

ρϕ σ μ ϕ ϕ ρϕ σ

πσ

σ π

/ σ ρϕ ϕϕ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 11: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

τ

ϕ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 12: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ ρϕ σ

ϕ τ σ ρϕ σ

σ σ

ϕϕ

τ σ ϕ

π ϕϕ

σ

π ϕϕ

σ

τ σ ϕ

σ

δ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 13: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

π ϕ π ϕ π ϕ

ϕδ

π ϕ

ϕ ϕ : ϕ

ϕ ϕ : ϕ ϕ π ϕσ ϕ

ϕ ϕϕ ϕ

ϕ ϕ

τσ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 14: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ

/ϕϕ

ϕ ϕ

ϕ /ϕ τ ϕ /ϕ

ϕ

ϕ /ϕτσ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 15: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ

ϕ ϕ τ/ σ

μ ϕμ ϕ ϕ / ϕ ϕ ϕ

ϕ / ϕ

π π ϕ π ϕ

ϕ ϕ

ϕ

σ ϕ ϕ

ϕ ϕ

σ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 16: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

∞ϕ ϕ ϕ π

δ

ϕ

π ϕ

∞ϕ μ ϕ ϕ σ π

σ π

σ ρϕ σ ϕ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 17: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ ϕ ϕ ϕ

ϕ ϕ

/

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 18: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ∗ϕ∗aϕ

(FE)

(ZCP)

efδ

π

π

aπ(Trade)

(Autarky)

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Page 19: $53DEB5 !>DB19>4ECDBI 5D5B?75>59DI9>+B145%?45 +85 5 #BE7=1>=?459F5BC17

ϕ ϕ ϕ ϕ ϕ ϕ

ϕ ϕ

ϕ σϕ

ϕ

σ

σϕ

ϕ

σ

ϕ

ϕ τ

τ

Cite as: Pol Antras, course materials for 14.581 International Economics I, Spring 2007. MIT OpenCourseWare(http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].