Factor price equalization and exhaustible resources
This dissertation examines the effect of exhaustible resources on certain well known theorems from international trade, particularly the factor price equalization theorem. A simple two country, two traded good, two nontraded factor Heckscher-Ohlin format is used where one of the factors is specially identified as an exhaustible resource. Previous authors have extended certain international trade theorems in a similar context, but the factor price equalization theorem has not been considered, and it can easily be shown that factor price equalization is implicitly ruled out in these models. A brief review of the relevant literature is provided in chapter II. The primary analysis consists of two main sections. In chapter III models are presented of a planned world economy and a competitive world economy, while in chapter IV the international trade theorems are presented. Both the planned and competitive models are dynamic Heckscher-Ohlin type models under a typical set of neoclassical assumptions. The chapter presenting the international trade results is primarily concerned with establishing a factor price equalization theorem. It is found that factor prices will equalize for any period of time when both countries diversify in commodity production, a result completely analogous to the well known static theorem.
- Research Organization:
- Kansas Univ., Lawrence (USA)
- OSTI ID:
- 5605867
- Country of Publication:
- United States
- Language:
- English
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