A many-cone world?
The breakdown of global factor price equalization, or a single-cone world, is a central concern in various fields of economics. This paper examines the empirical validities of the following two claims: 1) the multiple-cone Heckscher–Ohlin (HO) model fits better than does the single-cone HO model; and 2) increases in the number of cones improve the fit of the model. One of the contributions of this paper is that it focuses simultaneously on factor endowments, production patterns, and wage disparities across economies. My empirical results support the first claim but not the second claim. The results suggest that although the multiple-cone model performs better than does the single-cone model, the increases in the number of cones do not necessarily result in better performance of the HO model.
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