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Factor Content Functions and the Theory of International Trade

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Author Info
Neary, J Peter
Schweinberger, Albert G

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Abstract

This Paper introduces the concepts of direct and indirect factor trade utility functions and uses them to derive Marshallian and Hicksian factor content functions, which express the quantities of factors embodied in net exports as a function of the economy's factor prices and endowments. The properties of these functions are discussed and they are used to derive a number of new results. In particular, it is shown that, in certain circumstances, the existence of gains from trade is necessary and sufficient for the Heckscher-Ohlin theorem to hold in its factor content form.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3.

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Date of creation: Jan 1984
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Handle: RePEc:cpr:ceprdp:3

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Related research
Keywords: Factor Content Functions; Factor Trade Utility Functions; Gains from Trade; Heckscher-Ohlin Theorem;

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  1. James E. Anderson & J. Peter Neary, 1999. "The Mercantilist Index of Trade Policy," NBER Working Papers 6870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Flôres Junior, Renato Galvão, 2008. "Are CGE Models Still Useful in Economic Policy Making?," Economics Working Papers (Ensaios Economicos da EPGE) 674, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  3. J. Peter Neary, 2000. "International Trade and the Environment - Theoretical and Policy Linkages," Working Papers 200018, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  4. J.P. Neary, 1997. "Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs and Subsidies to High Technology Industries," CEP Discussion Papers dp0346, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  5. Daniel Bernhofen, 2009. "Predicting the pattern of international trade in the neoclassical model: a synthesis," Economic Theory, Springer, vol. 41(1), pages 5-21, October. [Downloadable!] (restricted)
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