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International trade, factor mobility, and trade costs

Norman, VD and Venables, Tony (1995) International trade, factor mobility, and trade costs. Economic Journal, 105 (433). pp. 1488-1504. ISSN 0013-0133

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Abstract

We consider a Heckscher-Ohlin model in which goods and factors of production can be traded, but trade involves transactions costs. Goods trade alone will not equalise factor prices, so there is an incentive for factors to move internationally. We characterise equilibria in which there is no trade, good trades only, factor movement only, and both trade in goods and factor movement. This generalised the Heckscher-Ohlin model to explain not only the direction of trade, but also the prior question of what gets traded, i.e. how goods and factors are partitioned into tradeables and non-tradeables.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/%28...
Additional Information: © 1995 Royal Economic Society
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: F - International Economics > F2 - International Factor Movements and International Business
Sets: Departments > Economics
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 27 Apr 2007
URL: http://eprints.lse.ac.uk/1182/

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