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Factor Prices, Factor Proportions, and Factor Endowments in the Pacific Northwest: A Regional Test of the Heckscher-Ohlin Theorem for the n-factor Case

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  • Madresehee, Mehrdad

Abstract

A generalized version of the Heckscher-Ohlin model of trade has been developed by A. V. Deardorff for the "l"-factor, "m"-commodity, and "n"-country case. To test the validity of the Deardorff's model, first the factor content and commodity composition of trade between the Pacific Northwest (PNW) and the rest of the United States reestimated. These estimated values are then employed in a model to examine the degree of importance of relatively cheap energy and capital prices and relatively expensive wage rates in determining the level and composition of the PNW's trade with the rest of the United States. This study finds that the Pacific Northwest has a comparative advantage in the production of those goods which intensively use energy and capital and sparingly use labor in their production processes. This finding is, of course, in accord with the prediction of Deardorff's model.

Suggested Citation

  • Madresehee, Mehrdad, 1993. "Factor Prices, Factor Proportions, and Factor Endowments in the Pacific Northwest: A Regional Test of the Heckscher-Ohlin Theorem for the n-factor Case," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 27(2), pages 143-152.
    • Handle: RePEc:spr:anresc:v:27:y:1993:i:2:p:143-52
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