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Factor Content Functions and the Theory of International Trade

Author

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  • Neary, J Peter
  • Schweinberger, Albert G
Abstract
This Paper introduces the concepts of direct and indirect factor trade utility functions and uses them to derive Marshallian and Hicksian factor content functions, which express the quantities of factors embodied in net exports as a function of the economy's factor prices and endowments. The properties of these functions are discussed and they are used to derive a number of new results. In particular, it is shown that, in certain circumstances, the existence of gains from trade is necessary and sufficient for the Heckscher-Ohlin theorem to hold in its factor content form.

Suggested Citation

  • Neary, J Peter & Schweinberger, Albert G, 1984. "Factor Content Functions and the Theory of International Trade," CEPR Discussion Papers 3, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3
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    Citations

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    Cited by:

    1. Daniel Bernhofen, 2009. "Predicting the pattern of international trade in the neoclassical model: a synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(1), pages 5-21, October.
    2. Daniel Bernhofen, 2010. "The Empirics of General Equilibrium Tade Theory: What Have we Learned?," CESifo Working Paper Series 3242, CESifo.
    3. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 25, pages 399-417, Edward Elgar Publishing.
    4. Rodrigo Adao & Arnaud Costinot & Dave Donaldson, 2017. "Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade," American Economic Review, American Economic Association, vol. 107(3), pages 633-689, March.
    5. Joseph Francis Francois & Miriam Manchin, 2013. "Lerner meets Gravity," UCL SSEES Economics and Business working paper series 123, UCL School of Slavonic and East European Studies (SSEES).
    6. Schweinberger, Albert G, 1996. "Procompetitive Gains from Trade and Comparative Advantage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 361-375, May.
    7. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, May.
    8. Miguel Almunia & Pol Antràs & David Lopez-Rodriguez & Eduardo Morales, 2021. "Venting Out: Exports during a Domestic Slump," American Economic Review, American Economic Association, vol. 111(11), pages 3611-3662, November.
    9. Flôres Junior, Renato Galvão, 2008. "Are CGE Models still useful in economic policy making?," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 674, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    10. J. Peter Neary, 1998. "Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High‐Technology Industries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 187-206, March.
    11. Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
    12. Antimiani, Alessandro & Fusacchia, Ilaria & Salvatici, Luca, 2016. "Value Added Trade Restrictiveness Indexes. Measuring Protection with Global Value Chains," Conference papers 332745, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Gilroy, Bernard Michael, 1991. "Faktorgehalt und internationaler Handel [Factor content and international trade]," MPRA Paper 21037, University Library of Munich, Germany.
    14. J. Neary, 2006. "International Trade and the Environment: Theoretical and Policy Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 95-118, January.
    15. Devereux, John & Connolly, Michael, 1996. "Commercial policy, the terms of trade and the real exchange rate revisited," Journal of Development Economics, Elsevier, vol. 50(1), pages 81-99, June.
    16. Pantzios, Christos J. & Taylor, Timothy G., 1998. "Trade Liberalization And Japanese Agricultural Import Policies," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-13, December.
    17. Daniel M. Bernhofen & John C. Brown, 2016. "Testing the General Validity of the Heckscher-Ohlin Theorem," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 54-90, November.

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