@article{10.1162/qjec.2010.125.2.829,
    author = {M. Grossman, Gene and Rossi-Hansberg, Esteban},
    title = "{External Economies and International Trade Redux*}",
    journal = {The Quarterly Journal of Economics},
    volume = {125},
    number = {2},
    pages = {829-858},
    year = {2010},
    month = {05},
    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. With Bertrand competition, each firm can internalize the externalities from production by setting a price below those set by others. This out-of-equilibrium threat eliminates many of the “pathologies” of the standard treatment. 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 ensured.}",
    issn = {0033-5533},
    doi = {10.1162/qjec.2010.125.2.829},
    url = {https://doi.org/10.1162/qjec.2010.125.2.829},
    eprint = {http://oup.prod.sis.lan/qje/article-pdf/125/2/829/5319794/125-2-829.pdf},
}