Abstract
<jats:title>Abstract</jats:title> <jats:p>This chapter covers the Dornbusch–Fischer–Samuelson (DFS) model, which extends the Ricardian framework by introducing a continuum of goods, allowing trade theory to move beyond the restrictive 2×2×2 setting. The model shows how relative wages and productivity jointly determine the cutoff good that separates production across countries, ensuring balanced trade and specialization according to comparative advantage. Welfare gains are derived formally from cheaper imports, reinforcing the central role of trade in improving consumption possibilities. In particular, the chapter aims to highlight the flexibility of the DFS model: It accommodates comparative statics such as labor force growth, technology improvements, and trade costs, which generate realistic insights into terms of trade, specialization patterns, and welfare effects. By linking elegant theory with practical extensions, the model offers a powerful tool for analyzing globalization beyond the simplest settings while preserving the Ricardian intuition of gains from trade.</jats:p>