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An extended Heckscher-Ohlin model with transaction costs and technological comparative advantage

Author

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  • Wenli Cheng
  • Jeffrey Sachs
  • Xiaokai Yang

Abstract

This paper introduces technological differences and transaction costs into the Heckscher-Ohlin (HO) model and examines the HO theorem, factor price equalization theorem, the Stolper-Samuelson theorem and the Rybczynski theorem. It shows that the HO theorem can be refined, and that the factor price equalisation theorem, the Stolper-Samuelson Theorem and the Rybczynski theorem do not always hold. It also shows that transaction costs play an important role in determining the equilibrium trade pattern. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Wenli Cheng & Jeffrey Sachs & Xiaokai Yang, 2004. "An extended Heckscher-Ohlin model with transaction costs and technological comparative advantage," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 671-688, March.
    • Handle: RePEc:spr:joecth:v:23:y:2004:i:3:p:671-688
    DOI: 10.1007/s00199-003-0405-0
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    Citations

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    Cited by:

    1. Murat Üngör, 2009. "De-industrialization of the Riches and the Rise of China," DEGIT Conference Papers c014_040, DEGIT, Dynamics, Economic Growth, and International Trade.
    2. 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.
    3. Cheng, Wenli & Yang, Xiaokai, 2004. "Inframarginal analysis of division of labor: A survey," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 137-174, October.

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