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On The Likelihood Of Factor Price Equalization With Nontraded Goods

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Author Info

  • DEARDORFF, A.V.
  • COURANT, P.N.

Abstract

It is argued that nontraded goods reduce the likelihood of factor price equalization. Specifically, the addition of nontraded goods to a small, open-economy Heckscher-Ohlin model with any number of goods reduces the size of the cone of diversification by the fraction of income spent on nontraded goods. This in turn may be regarded as reducing by a comparable amount the likelihood that a country's factor endowments will lie within that cone and, thus, the likelihood of factor price equalization. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 241.

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Length: 9 pages
Date of creation: 1989
Date of revision:
Handle: RePEc:mie:wpaper:241

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Postal: ANN ARBOR MICHIGAN 48109
Web page: http://www.fordschool.umich.edu/rsie/
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Keywords: pricing ; international trade ; economic models;

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Cited by:
  1. James E. Anderson & Will Martin, 2010. "Costs of Taxation and Benefits of Public Goods with Multiple Taxes and Goods," Boston College Working Papers in Economics 731, Boston College Department of Economics.
  2. Glenn Rayp, 1998. "An empirical test of the Dixit-Norman approach to factor price equalization, using cointegration techniques," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 134(3), pages 484-512, September.
  3. Adrian Wood (ODID), . "A more general Heckscher-Ohlin model," QEH Working Papers qehwps185, Queen Elizabeth House, University of Oxford.
  4. Peter Debaere & Ufuk Demiroglu, 2003. "Factor Accumulation Without Diminishing Returns: The Case of East Asia: Technical Paper 2003-11," Working Papers 15113, Congressional Budget Office.

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