An extended Heckscher-Ohlin model with transaction costs and technological comparative advantage

Wenli Cheng, Jeffrey Sachs and Xiaokai Yang

Economic Theory, 2004, vol. 23, issue 3, 688 pages

Abstract: This paper introduces technological differences and transaction costs into the Heckscher-Ohlin (HO) model and examines the HO theorem, factor price equalization theorem, the Stolper-Samuelson theorem and the Rybczynski theorem. It shows that the HO theorem can be refined, and that the factor price equalisation theorem, the Stolper-Samuelson Theorem and the Rybczynski theorem do not always hold. It also shows that transaction costs play an important role in determining the equilibrium trade pattern. Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: H-O theorem; Factor price equalization theorem; Stolper-Samuelson theorem; Rybczynski theorem; Transaction costs; Trade pattern. (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s00199-003-0405-0

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