Factor substitution and factor intensities in models with more factors than goods

Abstract

This paper considers the commodity prices–factor prices relation in models with more factors than consumption goods. Under some simple factor substitutability assumptions, many results in the n × n cases have counterparts in the l × n cases. The proportional price changes of the “middle factors” will be trapped between those of the “extreme factors”. A weak and a strong Stolper–Samuelson theorem can also be proven. If the numbers of goods and perfectly complementary factors are equal and the production functions have the nested constant elasticity of substitution form, two of the complementary factors would have the most extreme relative price changes, regardless of the factor intensities.

Domestic trading costs and pure theory of international trade

“…5 5 For some more intricate issues on general equilibrium trade models readers may go through Wong (2005), Sim and Ho (2007), Mukherjee (2008), Oyama et al (2011) etc. …”