1999 Reports

An Inframarginal Analysis of the Heckscher-Olin Model with Transaction Costs and Technological Comparative Advantage

Cheng, Wen Li; Sachs, Jeffrey D.; Yang, Xiaokai

In the paper we introduce technological comparative advantage and transaction costs into the Heckscher-Olin (HO) model and refine the HO theorem, the Stolper-Samuelson theorem, the Rybczynski theorem, and factor equalization theorem. The refined core theorems can be used to accommodate recent empirical evidence that is at odds with the core theorems.