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A more general Heckscher-Ohlin model

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  • Adrian Wood (ODID)

Abstract

This paper formalises the enduring insights of Heckscher and Ohlin in a way that avoids the two least satisfactory features of the standard Heckscher-Ohlin-Samuelson model, namely that in an open economy factor prices are unaffected by endowments or demand and that outcomes vary drastically with the assumed numbers of goods and factors. Its main innovation is to recognise that (and describe simply how) trade costs diminish the economic impact of differences between places in relative production costs, a point relevant also to other models of trade. The Heckscher-Ohlin-Samuelson model is a special case of the more general model.

Suggested Citation

  • Adrian Wood (ODID), "undated". "A more general Heckscher-Ohlin model," QEH Working Papers qehwps185, Queen Elizabeth House, University of Oxford.
  • Handle: RePEc:qeh:qehwps:qehwps185
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    File URL: http://www3.qeh.ox.ac.uk/RePEc/qeh/qehwps/qehwps185.pdf
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    References listed on IDEAS

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    1. Deardorff, Alan V & Courant, Paul N, 1990. "On the Likelihood of Factor Price Equalization with Nontraded Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 589-596, August.
    2. Richard Baldwin & James Harrigan, 2011. "Zeros, Quality, and Space: Trade Theory and Trade Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 60-88, May.
    3. John Romalis, 2004. "Factor Proportions and the Structure of Commodity Trade," American Economic Review, American Economic Association, vol. 94(1), pages 67-97, March.
    4. Alfonso Irarrazabal & Andreas Moxnes & Luca David Opromolla, 2015. "The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 777-792, October.
    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. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2017. "Quantifying The Uruguay Round," World Scientific Book Chapters,in: Trade Policies for Development and Transition, chapter 16, pages 363-388 World Scientific Publishing Co. Pte. Ltd..
    7. James E. Rauch & Vitor Trindade, 2003. "Information, International Substitutability, and Globalization," American Economic Review, American Economic Association, vol. 93(3), pages 775-791, June.
    8. Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
    9. Markusen, James R. & Venables, Anthony J., 2007. "Interacting factor endowments and trade costs: A multi-country, multi-good approach to trade theory," Journal of International Economics, Elsevier, vol. 73(2), pages 333-354, November.
    10. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
    11. Alessandro Nicita & Marcelo Olarreaga, 2007. "Trade, Production, and Protection Database, 1976--2004," World Bank Economic Review, World Bank Group, vol. 21(1), pages 165-171.
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    Cited by:

    1. Adrian Wood & Jörg Mayer, 2011. "Has China de-industrialised other developing countries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 325-350, June.

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