Citation

Discussion Paper Details

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Title: Factor Content Functions and the Theory of International Trade

Author(s): J Peter Neary and Albert G Schweinberger

Publication Date: January 1984

Keyword(s): Factor Content Functions, Factor Trade Utility Functions, Gains from Trade, Heckscher-Ohlin Theorem, Land and Power

Programme Area(s): Development Economics, Economic History and International Trade and Regional Economics

Abstract: This Paper introduces the concepts of direct and indirect factor trade utility functions and uses them to derive Marshallian and Hicksian factor content functions, which express the quantities of factors embodied in net exports as a function of the economy's factor prices and endowments. The properties of these functions are discussed and they are used to derive a number of new results. In particular, it is shown that, in certain circumstances, the existence of gains from trade is necessary and sufficient for the Heckscher-Ohlin theorem to hold in its factor content form.

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Bibliographic Reference

Neary, J and Schweinberger, A. 1984. 'Factor Content Functions and the Theory of International Trade'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3