EconPapers    
Economics at your fingertips  
 

Nonhomothetic Tastes and Missing Trade of Factor Services

James Cassing () and Shuichiro Nishioka ()

No 09-03, Working Papers from Department of Economics, West Virginia University

Abstract: The recent literature on the Heckscher-Ohlin-Vanek (HOV) model has concentrated on the production side, particularly the unrealistic assumptions of identical techniques and factor price equalization. However, less is known about the demand side. In this paper, we study the assumption of identical and homothetic preferences as a cause of the empirical failures in the HOV prediction. While the relaxation in identical production techniques is still crucial to predict the direction of factor trade, nonhomothetic tastes are shown to play an important role in explaining why factor trade is “missing” in the sense of Trefler (1995) relative to the HOV prediction.

Keywords: Heckscher-Ohlin; Technology; North-South Bias in Development; Factor Abundance; Nonhomothetic Tastes; Per Capita Income (search for similar items in EconPapers)
JEL-codes: F11 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://be.wvu.edu/phd_economics/pdf/09-03.pdf First version, August 2009 (application/pdf)

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:wvu:wpaper:09-03

Access Statistics for this paper

More papers in Working Papers from Department of Economics, West Virginia University Contact information at EDIRC.
Bibliographic data for series maintained by Josh Hall ().

 
Page updated 2022-06-18
Handle: RePEc:wvu:wpaper:09-03