Heckscher–Ohlin and specific-factors trade models for finite changes: how different are they?

Ronald Jones

International Review of Economics & Finance, 2014, vol. 29, issue C, 650-659

Abstract: In competitive international trade theory two of the basic models are the Specific Factors Model and the Heckscher/Ohlin model, with dimensionality 3×2 and 2×2 respectively. A surprising result in Heckscher/Ohlin is that the effect on factor prices of an infinitesimal change in a commodity price depends neither on the importance of the industry nor on the differences between sectors in the flexibility of technology. For finite price changes this need no longer be the case, and the model form itself may change endogenously as production patterns get altered. Furthermore, the extent of the response of the wage rate to a price increase in the more labor-intensive commodity becomes less severe the greater is the discrepancy between the degree of labor-intensity difference between sectors in the Heckscher–Ohlin model but more severe in the Specific-Factors model.

Keywords: Flexibility of technology; Factor bias in technological change (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056013000907
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:29:y:2014:i:c:p:650-659

DOI: 10.1016/j.iref.2013.09.001

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().