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The Missing Link: The Ricardian Approach to the Factor Endowments Theory of Trade

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  • Ruffin, Roy J

Abstract

This paper views all interpersonal trade as Ricardian, while all international trade reflects each country's factor endowment. The model provides the logical link betwe en Heckscher-Ohlin and Ricardo. The strength of the model is that it allows simpler and more robust theorems about trade, welfare, and fac tor payments. Factor price equalization holds universally and Stolper -Samuelson is not tied to the number of goods or factors. A key resul t is that the old Mill theorem that the small country gains all from trade is incorrect. Trade patterns with three factors and two goods a re completely characterized. Copyright 1988 by American Economic Association.

Suggested Citation

  • Ruffin, Roy J, 1988. "The Missing Link: The Ricardian Approach to the Factor Endowments Theory of Trade," American Economic Review, American Economic Association, vol. 78(4), pages 759-772, September.
  • Handle: RePEc:aea:aecrev:v:78:y:1988:i:4:p:759-72
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    Cited by:

    1. Ruffin, Roy J., 2001. "Quasi-specific factors: worker comparative advantage in the two-sector production model," Journal of International Economics, Elsevier, vol. 53(2), pages 445-461, April.
    2. Grossman, G.M., 1998. "Imperfect Labour Contracts and International Trade," Papers 205, Princeton, Woodrow Wilson School - Public and International Affairs.
    3. Ronald W. Jones, 2015. "On Blending Competitive Trade Models," Pacific Economic Review, Wiley Blackwell, vol. 20(5), pages 651-686, December.
    4. Gene M. Grossman, 2004. "The Distribution of Talent and the Pattern and Consequences of International Trade," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 209-239, February.
    5. Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," Econometrica, Econometric Society, vol. 77(4), pages 1165-1192, July.
    6. Henry Thompson, 2016. "Tariffs and Wages in Trade Theory," Review of Development Economics, Wiley Blackwell, vol. 20(2), pages 399-405, May.
    7. Ruffin, Roy J., 2003. "Oligopoly and trade: what, how much, and for whom?," Journal of International Economics, Elsevier, vol. 60(2), pages 315-335, August.
    8. Gene Grossman, 2002. "The Distribution of Talent and the Pattern and Consequences of International Trade," CESifo Working Paper Series 745, CESifo Group Munich.
    9. Ronald W. Jones, 2010. "Production Possibility Frontiers," Chapters,in: Famous Figures and Diagrams in Economics, chapter 33 Edward Elgar Publishing.
    10. Kwok Tong Soo, 2014. "The gains from external scale economies and comparative advantage," Economics Bulletin, AccessEcon, vol. 34(1), pages 84-88.
    11. Sugata Marjit & Hamid Beladi, 2009. "International And Intra-National Trade: A Continuum Approach," The Japanese Economic Review, Japanese Economic Association, vol. 60(3), pages 320-332.
    12. Ruffin, Roy J., 2009. "The gains from specialization and population size," Economics Letters, Elsevier, vol. 105(1), pages 76-77, October.
    13. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November.
    14. ICHIDA Toshihiro, 2015. "Trade-offs in Compensating Transfers for a Multiple-skill Model of Occupational Choice," Discussion papers 15083, Research Institute of Economy, Trade and Industry (RIETI).

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