The specific factor model analyses also the effect of changes in prices of the commodities upon the returns of the factors. Suppose the price of X commodity rises, it will raise the value of marginal product of X, i.e., P X .MPL X in proportion and will cause a shift in the curve XX (See Fig. 9.5) upwards to X 1X 1. The specific factor model is used to demonstrate the effects of economic changes on labor allocation, output levels and factor returns. Many types of economic changes can be considered including a movement to free trade, the implementation of a tariff or quota, growth of the labor or capital endowment, or technological changes. A specific factor is one that is stuck in an industry or is immobile between industries in response to changes in market conditions. A factor may be immobile between industries for a number of reasons. Some factors may be specifically designed (in the case of capital) or specifically trained (in the case of labor) Two Firm Equilibrium in the Specific Factor Model The economy consists of two industries, textiles and steel, each of which is choosing labor input so as to maximize profit. Thus when both industries operate and both maximize profit,
A definitive ordering of the percentage changes in all goods and factor prices in a two good specific factor model was derived mathematically by Jones (1971). The magnification effect for the specific factor model is analogous to the magnification effect for prices demonstrated in the Heckscher-Ohlin model.
Static models of international trade based on the specific-factors model incorporate only the first of these. Once the second is recognized the supply of capital Explanation: The economy has two sectors and three factors. Each sector has a specific factor that is confined to it, and each also employs labor, which is Specific Factors Models are based on the basic point that not all factors of production are mobile. Immobile factors are affected differently whether imports or Economic theory allows for several competing models of the relationship between international trade and wages. During the past two decades, many studies have Static models of international trade based on the specific-factors model incorporate only the first of these. Once the second is recognized the supply of capital Feb 5, 2018 For now lets focus on the home country. 1 Specific-Factors Model. © 2014 Worth Publishers International. Economics, 3e | Feenstra/Taylor. 3 Problem Set 3 - Solutions - Specific Factors Model. University of Notre Dame > International Trade (ECON40710). Problem(Set(3(. (. Question(1(.
This is “The Specific Factor Model”, section 5.16 from the book Policy and Theory of International Trade (v. 1.0). For details on it (including licensing), click here.
T. N. Srinivasan, “International Factor Movements, Commodity Trade and Commercial Policy in a Specific Factor Model,”Journal of International Economics , 14, The next major step in international trade theory was to allow more than a single factor, perhaps land, capital, or both, to join labor in theoretical attempts at Download Citation | Trade, wages, and the specific factors model: Empirical evidence of trade on wages in the context of the specific factors model by focusing on the link between trade and the. June 2009 · International Economic Journal. Specific Factors Models are based on the basic point that not all factors of production are mobile. Immobile factors are affected differently whether imports or and with a fixed and specific factor, Vwine production capitalV, the quantity of stand and appreciate the economisths approach to international trade issues, a.