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Factor Endowment, the Choice of Technology, and the Volume of Trade

Listed author(s):
  • Haiwen Zhou

This paper studies impacts of factor endowment on international trade in a general equilibrium model in which firms choose their technologies endogenously. Although countries only differ in factor endowment ex ante, countries may also differ in their chosen technologies. If industries choose different capital-labor intensities in equilibrium, the Heckscher-Ohlin theorem, factor price equalization theorem, the Rybczynski theorem, and the Stolper-Samuelson theorem hold. If industries choose the same capital-labor intensity in equilibrium, the volume of trade is zero. None of the four theorems applies.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701699075
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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 21 (2007)
Issue (Month): 4 ()
Pages: 593-611

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Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:593-611
DOI: 10.1080/10168730701699075
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  1. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
  2. Peter K. Schott, 2003. "One Size Fits All? Heckscher-Ohlin Specialization in Global Production," American Economic Review, American Economic Association, vol. 93(3), pages 686-708, June.
  3. Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, Southern Economic Association, vol. 74(2), pages 581-600, October.
  4. Haiwen Zhou, 2004. "The division of labor and the extent of the market," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(1), pages 195-209, 07.
  5. Paul A. Samuelson, 1951. "A Comment on Factor Price Equalisation," Review of Economic Studies, Oxford University Press, vol. 19(2), pages 121-122.
  6. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
  7. Romney Robinson, 1956. "Factor Proportions and Comparative Advantage: Part II," The Quarterly Journal of Economics, Oxford University Press, vol. 70(3), pages 346-363.
  8. Zhou, Haiwen, 2006. "Intra-firm Specialization, Income Distribution, and International Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 577-592.
  9. Romney Robinson, 1956. "Factor Proportions and Comparative Advantage: Part I," The Quarterly Journal of Economics, Oxford University Press, vol. 70(2), pages 169-192.
  10. Wong, Kar-yiu, 1990. "Factor intensity reversal in a multi-factor, two-good economy," Journal of Economic Theory, Elsevier, vol. 51(2), pages 434-442, August.
  11. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
  12. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
  13. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," Review of Economic Studies, Oxford University Press, vol. 9(1), pages 58-73.
  14. Bagicha S. Minhas, 1962. "The Homohypallagic Production Function, Factor-Intensity Reversals, and the Heckscher-Ohlin Theorem," Journal of Political Economy, University of Chicago Press, vol. 70, pages 138-138.
  15. Haiwen Zhou, 2007. "Oligopolistic Competition And Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 915-933.
  16. Staiger, Robert W., 1988. "A specification test of the Heckscher-Ohlin theory," Journal of International Economics, Elsevier, vol. 25(1-2), pages 129-141, August.
  17. Maskus, Keith E., 1985. "A test of the Heckscher-Ohlin-Vanek theorem: The Leontief commonplace," Journal of International Economics, Elsevier, vol. 19(3-4), pages 201-212, November.
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