WhoGainsandWhoLosesfromTradeFactor-proportionstheoryFactor-endowmenttheoryBasicassumptionsforH-OmodelTherearetwofactorsofproduction:L,K;r,wThetechnologysetsavailabletoeachcountryareidentical.Theproductionofbothgoodsissubjecttoconstantreturnstoscale.Countriesdifferintheirendowmentsoffactorsofproduction.BasicassumptionsforH-OmodelTasteinthetwocountriesareidentical.Notransportcost,notarifforNTBsPerfectcompetitioninbothcommoditymarketandfactormarket,factormobilefreelyathome,notabroad.FactorproportionsFactorproportionFactorpricecostlaborlandlaborlandJapanwheat151¥4¥21¥cloth1011¥4¥14¥Australiawheat152$1$7$cloth1012$1$21$TheHeckscher-Ohlin(H-O)TheoryDifferenceinrelativefactorabundanceandrelativefactorprices→pre-tradedifferenceinrelativecommoditypricesRelativeabundanceoffactorsinthenationsThebasiccauseordeterminantofcomparativeadvantageandinternationaltrade:thedifferenceinrelativeabundanceoffactorendowment.H-OMODELAnationwillexportthecommoditywhoseproductionrequirestheintensiveuseofthenation’srelativelyabundantandcheapfactorandimportthecommoditywhoseproductionrequirestheintensiveuseofthenation’srelativelyscarceandexpensivefactor.H-OModelAcountryexportstheproductsthatuseitsabundantfactorsintensivelyandimportstheproductsusingitsscarcefactorsintensively.TheHeckscher-OhlinModelWithouttradePA’=2PA=1/2I0I1Nation1PPCNation2PPCXY0A’ATheHeckscher-OhlinModelWithtradeA’ABB’E=E’IxY0PB=PB’=0.9Nation1PPCNation2PPCC’CWhogainsandwholoseswithinacountryExport-orientedsector(出口导向部门)import-competingsector(进口竞争部门)Short-runeffectsofopeningtradelong-runeffectsofopeningtradeEffectsoffreetradeintheshort-runUSTherestworldlandownerslaborerslandownerslaborersInwheatGaingainloseloseInclothloselosegaingainEffectsoffreetradeinthelong-runUSTherestworldlandownerslaborerslandownerslaborersInwheatgainloselosegainInclothgainloselosegainThreeimplicationsoftheH-OtheoryTheStolper-SamuelsonTheoremTheSpecialized-FactorPatternTheFactor-PriceEqualizationTheoremThestolper-SamuelsonTheoremItraisestherealreturntothefactorusedintensivelyintherising-priceindustry.Itlowerstherealreturntothefactorusedintensivelyinthefallingpriceindustry.Pwheat=marginalcostofwheat=ar+bwPcloth=marginalcostofcloth=cr+dwWinnersandlosersfromtradeTheSpecialized-FactorPatternThemoreafactorisspecialized,orconcentrated,intheproductionofaproductwhoserelativepriceisrising(falling),themorethisfactorstandstogain(lose)fromthechangeintheproductprice.TheFactor-PriceEqualizationTheoremGivencertainconditionsandassumptions,withperfectfactormobilityfreetradeequalizesnotonlyproductpricesbutalsothepriceofindividualfactorsbetweenthetwocountries.Tradeandthedistributionofincome.DoesH-Omodelexplainactualtradepatterns?Leontief’sK/Ltest1947,US,exportedlabor-intensivegoodsinexchangeforrelativelycapital-intensivegoodsTheexplanationsTwo-factormodelAlternativeTheoriesofTradeDoesH-Omodelexplainactualtradepatterns?FactorendowmentsSkilledlaborUnskilledlaborMedium-skilledlaborHuman(labor)capital(education,jobtraining,healthembodiedinworkers)TheExplanationstoTheLeontiefParadoxHumanskillsTariffandNTBsNaturalresourcesFactor-intensityreversalTheexport-orientedsectorTheimport-competingsectorTheexport-orientedfactorTheimport-competingfactorDoesfactorpricesequalizeinternationally?Atendencytowardinternationalfactor-priceequalization.ToreducethedifferenceThankyou!