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Intra-industry trade in the Heckscher-Ohlin-Lerner-Samuelson model

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  • Chipman, John Somerset

Abstract

An n-commodity, n-factor, A"-country log-linear model is developed, with identical Cobb-Douglas production coefficients and identical consumer expenditure shares across countries, in which factor endowments are such as to permit positive production of all commodities in all countries, hence equalization of factor rentals among them. Explicit solutions are obtained for the countries' imports, exports, and outputs as well as for equilibrium prices and factor rentals. Allowance is made for interindustrial relationships and trade in intermediate products. Given any set of production and consumption coefficients and any set of world factor endowments which, when suitably allocated among countries, result in positive production of all commodities in all countries, and given any mode of aggregating the n commodities into at most n-1 industrial categories, it is shown that there exists an allocation of the world factor endowments among the K countries such that each country engages in trade and 100% of each country's trade is intra-industry trade (i.e., the values of imports and exports balance each other in each aggregate category).

Suggested Citation

  • Chipman, John Somerset, 1988. "Intra-industry trade in the Heckscher-Ohlin-Lerner-Samuelson model," Discussion Papers, Series II 72, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:72
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    References listed on IDEAS

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    1. Paul A. Samuelson, 1953. "Prices of Factors and Goods in General Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 1-20.
    2. R. W. Jones, 1956. "Factor Proportions and the Heckscher-Ohlin Theorem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 1-10.
    3. Antonio Aquino, 1978. "Intra-industry trade and inter-industry specialization as concurrent sources of International Trade in manufactures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 114(2), pages 275-296, June.
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    Cited by:

    1. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November.

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