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Factor intensities and factor substitution in general equilibrium: A Comment

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  • Nakada, Yoshiaki

Abstract

Jones and Easton (1983) analyzed how commodity prices affect factor prices in the three-factor two-good general equilibrium trade model. These relationships determine whether ‘a strong Rybczynski result’ holds or not. In subsection 5.2.4., they found that the set of three equations holds for ‘the economy-wide substitution’ under the assumption of ‘perfect complementarity’. And they applied this to their analysis. In the following, I demonstrate that this is impossible, hence their proof is not plausible. In subsection 5.2.5., they analyzed similarly. But their proof is not plausible, either.

Suggested Citation

  • Nakada, Yoshiaki, 2015. "Factor intensities and factor substitution in general equilibrium: A Comment," MPRA Paper 66758, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66758
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    References listed on IDEAS

    as
    1. Batra, Raveendra N. & Casas, Francisco R., 1976. "A synthesis of the Heckscher-Ohlin and the neoclassical models of international trade," Journal of International Economics, Elsevier, vol. 6(1), pages 21-38, February.
    2. Sato, Ryuzo & Koizumi, Tetsunori, 1973. "On the Elasticities of Substitution and Complementarity," Oxford Economic Papers, Oxford University Press, vol. 25(1), pages 44-56, March.
    3. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, vol. 15(1-2), pages 65-99, August.
    4. Henry Thompson, 1985. "Complementarity in a Simple General Equilibrium Production Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 616-621, August.
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    Cited by:

    1. Yoshiaki Nakada, 2017. "Factor endowment -- commodity output relationships in a three-factor, two-good general equilibrium trade model," Papers 1711.11429, arXiv.org.
    2. Nakada, Yoshiaki, 2015. "Economy-wide substitution and Rybczynski sign pattern in a three-factor two-good model," MPRA Paper 67863, University Library of Munich, Germany.
    3. Nakada, Yoshiaki, 2015. "Economy-wide substitution and Rybczynski sign pattern in a three-factor two-good model: Further analysis," MPRA Paper 67864, University Library of Munich, Germany.

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    More about this item

    Keywords

    three-factor two-good model; general equilibrium; Rybczynski result; economy-wide substitution; perfect complementarity.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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