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

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  • Haiwen Zhou

Abstract

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.

Suggested Citation

  • Haiwen Zhou, 2007. "Factor Endowment, the Choice of Technology, and the Volume of Trade," International Economic Journal, Taylor & Francis Journals, vol. 21(4), pages 593-611.
  • Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:593-611
    DOI: 10.1080/10168730701699075
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    References listed on IDEAS

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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.
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    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, July.
    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.
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    15. Haiwen Zhou, 2007. "Oligopolistic Competition And Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 915-933.
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    Cited by:

    1. Haiwen Zhou, 2014. "International Trade with Increasing Returns in the Transportation Sector," Frontiers of Economics in China, Higher Education Press, vol. 9(4), pages 606-633, December.
    2. Haiwen Zhou, 2013. "The Choice of Technology and Rural-Urban Migration in Economic Development," Frontiers of Economics in China, Higher Education Press, vol. 8(3), pages 337-361, September.

    More about this item

    Keywords

    Choice of technology; factor endowment; factor price equalization; Heckscher-Ohlin model; volume of trade;

    JEL classification:

    • F1 - International Economics - - Trade
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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