The conclusions of the model follow directly from this specification. Based on
results from the static theory of trade with differentiated goods (see for example Helpman
and Krugman 1985), one should expect that fixed costs lead to gains from increases in the
size of the market, and therefore to gains from trade between different countries. Perhaps
the most interesting feature of the equilibrium calculated for the model constructed here is
that increases in the size of the market have effects not only on the level of income and
welfare, but also on the rate of growth. Larger markets induce more research and faster
growth.