In the world trading system, there is a trade of differentiated products among countries due to their specialization in the same line of production. However, in two-by-two models two countries cannot specialize in the same line of production except for strategic reasons and necessarily gain from...

In the world trading system there has been an increase in unilateral trade and bilateral trade of differentiated products. However, the main trade theories have difficulties providing an explanation for unilateral trade. We show that profit seeking abroad by merchants or countries originates...