文档介绍：Chapter 3
Specific Factors and e Distribution
1
Introduction
The Specific Factors Model
International Trade in the Specific Factors Model
e Distribution and the Gains from Trade
The Political Economy of Trade: A Preliminary View
Summary
Appendix: Further Details on Specific Factors
anization
2
Introduction
Trade has substantial effects on the e distribution within each trading nation.
There are two main reasons why international trade has strong effects on the distribution of e:
Resources cannot move immediately or costlessly from one industry to another.
Industries differ in the factors of production they demand.
The specific factors model allows trade to affect e distribution.
3
Assumptions of the Model
Assume that we are dealing with one economy that can produce two goods, manufactures and food.
There are three factors of production; labor (L), capital (K) and land (T for terrain).
Manufactures are produced using capital and labor (but not land).
Food is produced using land and labor (but not capital).
Labor is therefore a mobile factor that can be used in either sector.
Land and capital are both specific factors that can be used only in the production of one good.
petition prevails in all markets.
The Specific Factors Model
4
How much of each good does the economy produce?
The economy’s output of manufactures depends on how much capital and labor are used in that sector.
This relationship is summarized by a production function.
The production function for good X gives the maximum quantities of good X that a firm can produce with various amounts of factor inputs.
For instance, the production function for manufactures (food) tells us the quantity of manufactures (food) that can be produced given any input of labor and capital (land).
The Specific Factors Model
5
The production function for manufactures is given by QM = QM (K, LM) (3-1)
where:
QM is the economy’s output of manufactures
K is the economy’s capital stock
LM is the labor force employed