Commodity Trade and Factor Mobility
1974; American Economic Association; Volume: 64; Issue: 4 Linguagem: Inglês
ISSN
1944-7981
Autores Tópico(s)Global trade and economics
ResumoSince Paul Samuelson's factor-price equalization theorem that commodity trade could serve as a perfect substitute for factor mobility, the mirror image problem of the conditions under which factor mobility could perfectly substitute for commodity trade has attracted the attention of such trade theorists as Robert Mundell, Ernest Nadel, and most recently Frank Flatters. The latter, in analyzing the case where factor-owners move with their exported productive factors, does not consider the question of the uniqueness of the equilibrium obtained. This is the subject of the present paper. It will be demonstrated that in the case where factor prices differ between countries in closed economy equilibrium, and where such difference is due to different factor endowment ratios in the two countries, f actor-price equalization is consistent with an infinite number of combinations of factor flows, the determination among which on a priori grounds is impossible. There will, however, be a single determinate mirror image solution in the case where trade is due to differences in tastes between the two countries.
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