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

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  • Zhou, Haiwen

Abstract

This paper studies impacts of factor endowment on international trade in a general equilibrium model in which firms choose their technologies endogenously. Though 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

  • Zhou, Haiwen, 2007. "Factor Endowment, the Choice of Technology, and the Volume of Trade," MPRA Paper 76424, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:76424
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    References listed on IDEAS

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    1. Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 581-600, October.
    2. 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.
    3. Romney Robinson, 1956. "Factor Proportions and Comparative Advantage: Part II," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(3), pages 346-363.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    9. 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.
    10. Haiwen Zhou, 2007. "Oligopolistic Competition And Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 915-933, December.
    11. Paul A. Samuelson, 1951. "A Comment on Factor Price Equalisation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 19(2), pages 121-122.
    12. 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.
    13. Romney Robinson, 1956. "Factor Proportions and Comparative Advantage: Part I," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(2), pages 169-192.
    14. 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.
    15. 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.
    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.
    18. Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 581-600, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Haiwen Zhou, 2019. "Resource abundance, market size, and the choice of technology," Bulletin of Economic Research, Wiley Blackwell, vol. 71(4), pages 641-656, October.
    2. Haiwen Zhou, 2014. "International Trade with Increasing Returns in the Transportation Sector," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 9(4), pages 606-633, December.
    3. Haiwen Zhou, 2013. "The Choice of Technology and Rural-Urban Migration in Economic Development," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 8(3), pages 337-361, September.

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    More about this item

    Keywords

    Choice of technology; factor endowment; factor price equalization; Heckscher-Ohlin model; volume of trade;
    All these keywords.

    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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