Endogenous comparative advantage via symmetry‐breaking policy equilibrium
研究两个相同国家在自由贸易下如何通过选择不同水平的公共品供给来内生形成比较优势，并分析了贸易成本和多商品情形的影响。
Abstract In this study, we analyze a symmetric policy game in a two‐country model in which domestic policy affects a Ricardian comparative advantage. Considering a two‐good, one‐factor set‐up in which each country's government provides a productive public good, we show that ex ante identical countries under free trade always choose different levels of public goods in the Nash equilibrium – meaning symmetry‐breaking always occurs. We also examine how our analysis is modified in the presence of trade costs and in a multi‐good set‐up. Moreover, we present a more elaborate model with input–output linkages and entry regulation in an upstream market as an application.