International Trade, Factor Mobility and Trade Costs
We consider a Heckscher-Ohlin model in which goods and factors of production can be traded, but trade involves transactions costs. Goods trade alone will not equalize factor prices, so there is an incentive for trade in factors of production. Whether goods or factors are traded depends on endowments and transactions costs. We characterize equilibria in which there is no trade, there is goods trade only, there is factor trade only, and there is trade in both goods and factors. This generalizes the Heckscher-Ohlin model to explain not only the direction of trade, but also the prior question of how goods and factors are partitioned to tradables and non-tradables.
|Date of creation:||Feb 1993|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:766. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.