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Firless Firwoes: How Preferences Can Interfere With The Theorems Of International Trade

In: Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff

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  • Alan V. DEARDORFF

    (University of Michigan, Ann Arbor, MI 48109, USA)

Abstract

An example is presented of a two-country, two-factor, four-good trade model in which free trade causes factor prices to be drawn farther apart than they were in autarky. The example is equivalent to a two-good model with a double factor intensity reversal (FIR), and thus demonstrates that the problems associated with FIRs can arise in many dimensions without them. These problems include the undermining of other trade theorems as well, and can be avoided only by making some assumption about demand as well as about technology. For example, the model becomes well-behaved if preferences and technology are both Cobb-Douglas.

Suggested Citation

  • Alan V. DEARDORFF, 2011. "Firless Firwoes: How Preferences Can Interfere With The Theorems Of International Trade," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 13, pages 129-140, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814340373_0013
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    Cited by:

    1. Rod Falvey & Udo Kreickemeier, 2017. "Globalization and Factor Returns in Competitive Markets," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 1, pages 3-25, World Scientific Publishing Co. Pte. Ltd..
    2. Rosés, Joan Ramón & Martínez-Galarraga, Julio & Tirado, Daniel A., 2010. "The upswing of regional income inequality in Spain (1860-1930)," Explorations in Economic History, Elsevier, vol. 47(2), pages 244-257, April.
    3. Matthew J. Slaughter, 1997. "Per Capita Income Convergence and the Role of International Trade," NBER Working Papers 5897, National Bureau of Economic Research, Inc.
    4. Matthew Slaughter, 2001. "Does trade liberalization converge factor prices? Evidence from the antebellum transportation revolution," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(3), pages 339-362.
    5. Falvey, Rod, 1999. "Trade liberalization and factor price convergence," Journal of International Economics, Elsevier, vol. 49(1), pages 195-210, October.
    6. Kozo Kiyota & Yoshinori Kurokawa, 2022. "Factor intensity reversals redux: Feenstra is right!," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 885-914, September.
    7. Parikh, Ashok & Shibata, Miyuki, 2004. "Does trade liberalization accelerate convergence in per capita incomes in developing countries?," Journal of Asian Economics, Elsevier, vol. 15(1), pages 33-48, February.
    8. Matthew J. Slaughter, 1998. "International Trade and Per Capita Income Convergence: A Difference-in-Differences Analysis," NBER Working Papers 6557, National Bureau of Economic Research, Inc.
    9. Yun, K.K. & Akita, J., 2000. "Technological Comparative Advantage and Behavior of Factor Prices with Trade," ISER Discussion Paper 0489, Institute of Social and Economic Research, Osaka University.
    10. Jiro AKITA & Kwan Koo YUN, 2004. "Technological Differences and the Impact of Trade on Wages," Econometric Society 2004 Far Eastern Meetings 757, Econometric Society.
    11. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
    12. Rod Tyers & Yongzheng Yang, 1997. "Trade with Asia and skill upgrading: Effects on labor markets in the older industrial countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(3), pages 383-418, September.
    13. Eleydiane Maria Gomes Vale & João Mário De Franç, 2014. "Cones De Diversificação E Comércio Exterior: Uma Análise Sobre Diferenças Salariais E Competitividade Industrial No Nordeste E Sudeste Do Brasil," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 109, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    14. Don Webber & Paul White, 2003. "Regional Factor Price Convergence Across Four Major European Countries," Regional Studies, Taylor & Francis Journals, vol. 37(8), pages 773-782.
    15. Nahuis, R., 1997. "On Globalisation, Trade and Wages," Other publications TiSEM f96f2ab3-c66f-438f-8a53-2, Tilburg University, School of Economics and Management.
    16. Adrian Wood (ODID), "undated". "A more general Heckscher-Ohlin model," QEH Working Papers qehwps185, Queen Elizabeth House, University of Oxford.
    17. Nicholas Apergis & Arusha Cooray, 2016. "Old Wine In A New Bottle: Trade Openness And Fdi Flows—Are The Emerging Economies Converging?," Contemporary Economic Policy, Western Economic Association International, vol. 34(2), pages 336-351, April.
    18. Slaughter, Matthew J., 2001. "Trade liberalization and per capita income convergence: a difference-in-differences analysis," Journal of International Economics, Elsevier, vol. 55(1), pages 203-228, October.

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