IDEAS home Printed from https://ideas.repec.org/p/deg/conpap/c016_042.html

Comparative Costs, the Invisible Hand, and Factor Endowments: Ricardo, Ohlin, and Samuelson

Author

Listed:
  • Bjarne S. Jensen

Abstract

The Ricardian principle of ‘comparative advantage’ refers to relative costs (relative autarky prices) compared to another country. The relative cost (price) functions can be obtained directly from specified cost functions with global regularity properties. We derive the CES relative cost function with two primary factor prices. The Stolper-Samuelson Theorem is embedded in relative cost functions and their numerical inelasticity property. Factor price equalization represents extreme parametric versions of the relative cost functions. Moreover a relative cost function connects isoquant tangents of contract curves with the tangents (shape) of production possibility curves. The CES relative cost function is combined with Ohlin‘s ‘mutual-interdependence theory of pricing’ in solving the Walrasian general equilibrium system.

Suggested Citation

  • Bjarne S. Jensen, 2011. "Comparative Costs, the Invisible Hand, and Factor Endowments: Ricardo, Ohlin, and Samuelson," DEGIT Conference Papers c016_042, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c016_042
    as

    Download full text from publisher

    File URL: http://degit.sam.sdu.dk/papers/degit_16/c016_042.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. H. Uzawa, 1971. "On a Two-Sector Model of Economic Growth," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 3, pages 19-26, Palgrave Macmillan.
    2. H. Oniki & H. Uzawa, 1965. "Patterns of Trade and Investment in a Dynamic Model of International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(1), pages 15-37.
    3. Hsiao, Frank S T, 1971. "The Contract Curve and the Production Possibility Curve," Journal of Political Economy, University of Chicago Press, vol. 79(4), pages 919-923, July-Aug..
    4. Opp, Marcus M. & Sonnenschein, Hugo F. & Tombazos, Christis G., 2009. "Rybczynski's Theorem in the Heckscher-Ohlin World -- Anything Goes," Journal of International Economics, Elsevier, vol. 79(1), pages 137-142, September.
    5. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    6. N/A, 1967. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 42(1), pages 3-3, November.
    7. N/A, 1967. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 39(1), pages 3-3, February.
    8. Bjarne S. Jensen & Martin Richter & Chunyan Wang & Preben K. Alsholm, 2001. "Saving Rates, Trade, Technology, and Stochastic Dynamics," Review of Development Economics, Wiley Blackwell, vol. 5(2), pages 182-204, June.
    9. Shimomura, Koji & Wong, Kar-yiu, 1998. "The Law of comparative Advantage without Social Utility Functions," Review of International Economics, Wiley Blackwell, vol. 6(3), pages 401-406, August.
    10. Travis, William P, 1972. "Production, Trade, and Protection When There are Many Commodities and Two Factors," American Economic Review, American Economic Association, vol. 62(1), pages 87-106, March.
    11. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, August.
    12. repec:bla:germec:v:4:y:2003:i:1:p:53-87:a is not listed on IDEAS
    13. 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(2), pages 138-138.
    14. Hirofumi Uzawa, 1962. "Production Functions with Constant Elasticities of Substitution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(4), pages 291-299.
    15. N/A, 1967. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 41(1), pages 3-3, August.
    16. N/A, 1967. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 40(1), pages 3-3, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bjarne S. Jensen & Mogens E. Larsen, 2005. "General Equilibrium Dynamics of Multi-Sector Growth Models," DEGIT Conference Papers c010_003, DEGIT, Dynamics, Economic Growth, and International Trade.
    2. Bjarne S. Jensen, 2004. "Pareto Efficiency, Relative Prices, and Solutions to CGE Models," DEGIT Conference Papers c009_006, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Bjarne S. Jensen & Martin Richter, 2008. "Stochastic One-Sector and Two-Sector Growth Models in Continuous Time," DEGIT Conference Papers c013_035, DEGIT, Dynamics, Economic Growth, and International Trade.
    4. Alan V. Deardorff, 2011. "Rich And Poor Countries In Neoclassical Trade And Growth," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 25, pages 295-313, World Scientific Publishing Co. Pte. Ltd..
    5. Wei-Bin Zhang, 2017. "Discrimination and Inequality in an Integrated Walrasian-General-Equilibrium and Neoclassical-Growth Theory," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 5(1), pages 57-76, March.
    6. Fukao Kyoji & Hamada Koichi, 1994. "International Trade and Investment under Different Rates of Time Preference," Journal of the Japanese and International Economies, Elsevier, vol. 8(1), pages 22-52, March.
    7. Bianconi, Marcelo, 1995. "On dynamic real trade models," Economics Letters, Elsevier, vol. 47(1), pages 47-52, January.
    8. Sampson, Thomas, 2016. "Assignment reversals: Trade, skill allocation and wage inequality," Journal of Economic Theory, Elsevier, vol. 163(C), pages 365-409.
    9. Wei-Bin Zhang, 2014. "Environmental Dynamics in an Integrated Walrasian-General Equilibrium and Neoclassical-Growth Theory," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 39(3), pages 51-80, September.
    10. Arndt, Channing & Robinson, Sherman & Tarp, Finn, 2002. "Parameter estimation for a computable general equilibrium model: a maximum entropy approach," Economic Modelling, Elsevier, vol. 19(3), pages 375-398, May.
    11. 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.
    12. Alan Deardorff, 2001. "Developing country growth and developed country response," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(4), pages 373-392.
    13. Ossa, Ralph & Redding, Stephen, 2026. "The Economics of Tariffs," CEPR Discussion Papers 21221, Centre for Economic Policy Research.
    14. Babonneau, Frédéric & Haurie, Alain & Vielle, Marc, 2025. "A robust asymptotic control model to analyze climate policy with CDR options," Journal of Economic Dynamics and Control, Elsevier, vol. 177(C).
    15. Wei-Bin Zhang, 2016. "Economic Globalization and Interregional Agglomeration in a Multi-Country and Multi-Regional Neoclassical Growth Model," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 34, pages 95-121.
    16. van Marrewijk, Charles & Verbeek, Jos, 1993. "Disequilibrium Growth Theory in an International Perspective," Oxford Economic Papers, Oxford University Press, vol. 45(2), pages 311-331, April.
    17. Mountford, Andrew, 1998. "Trade, convergence and overtaking," Journal of International Economics, Elsevier, vol. 46(1), pages 167-182, October.
    18. Zhang, W.-B., 2014. "Ethnic Human Capital Externalities and Inequality in a General Equilibrium Growth Model," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 33-54.
    19. Wei-Bin Zhang, 2023. "Chaos, Complexity, and Nonlinear Economic Theory," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 13173, September.
    20. Beatriz Gaitan & Terry L. Roe, 2007. "Path Interdependence in a Dynamic Two Country Heckscher-Ohlin Model," Diskussionsschriften dp0704, Universitaet Bern, Departement Volkswirtschaft.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:deg:conpap:c016_042. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jan Pedersen (email available below). General contact details of provider: https://edirc.repec.org/data/iehhsdk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.