who gain and lost from trade 国贸.pptVIP

Chapter 4Who Gains and Who Loses from Trade? Figure 4.2 Three Implications of The H-O Theory The Stolper-Samuelson Theorem The Specialized-Factor Pattern The Factor-Price Equalization Theorem The Stolper-Samuelson Theorem Given certain conditions and assumptions, including full adjustment to a new long-run equilibrium, an event that changes product prices in a country unambiguously has two effects: It raises the real return to the factor used intensively in the rising-price industry. It lowers the real return to the factor used intensively in the falling price industry. The Stolper-Samuelson Theorem Four assumptions: Two countries, Two goods with two factors of production. One is relatively labor-intensive, the other is relatively land-intensive. Factors are mobile between sectors. Competition prevails in all markets. Production technology involves constant returns to scale. The Stolper-Samuelson Theorem Pwheat=Marginal cost of wheat=ar+bw Pcloth=Marginal cost of cloth=cr+dw Pwheat↑by 10% and Pcloth steady means r↑more than 10% and w↓ The factor used intensively in production in the rising-price sector has its marker reward rise even faster than the product price rises. A factor used intensively in the other sector has its real purchasing power cut. The Specialized-Factor Pattern The more a factor is specialized, or concentrated, in the production of a product whose relative price is rising, the more this factor stands to gain from the change in the product price. The more a factor is concentrated into a product whose relative price is falling, the more it stands to lose from the change in product price. International Factor PriceEqualization Given certain conditions and assumptions, free trade equalized not only product prices but also the prices of individual factors between the two countries. International Factor PriceEqualization With the shift to free trade: For each factor, its rate of return becomes more similar between countries. Under ideal