Three essays on international trade: Analyses of vertical specialization, Free Trade Agreement and international quality competition

The present dissertation consists of two topics related to international trade. The first topic combines Free Trade Agreement (FTA) with vertical specialization. By adding vertical production relationship in Krishna's (1998) model using a double marginalization framework, we can check how firms' preferences change for bilateral arrangements according to the partner country's position in global vertical specialization. The conclusion is that countries prefer their partner standing on the opposite side in the spectrum of vertical specialization.; The second topic suggests an international competition model using a quality ladder frame. With the assumptions of consumers with linear continuous quality references and convex unit costs about qualities, the equilibrium technology gap is achieved between the North and the South when the converging force and the diverging force is balanced, where the former comes from the southern imitating advantage and the latter from self-proliferating profits. Numerical simulations show that catch-ups or overtakings of industries by the South occurs, beginning from easily imitated industries. The smaller the South is, the larger is the chance to catch up with the North.; The model is extended to a three county competition structure in Chapter 3. When a third country joins the competition, it concentrates on easily imitated industries as the South did before. The better performance the South has shown in two country competition, the larger is its loss from the entrance of the third country. The three country competition gives the room for strategies. In some industries, The North may benefit by encouraging the newcomer to join the competition. The South can achieve higher income from the industrial policy which encourages its firms to concentrate on higher-tech industries before the entrance of a third country.