The Theorems of International Trade with Factor Mobility
Wilfred J. Ethier, Lars E.O. Svensson
This paper addresses the relation between goods trade and international factor mobility in general terms. Conditions for factor price equalization are derived for situations with tradein both goods and factors,as well as Rybczynski and Stolper-Sarnuel Sofl theorems. A weak price versionof the Heckscher-Ohlifl theorem is presented, as well as stronger quantity versions.The basic theorems of international trade, suitably interpreted,are shown to hold in their strong versions ifthe number of international markets is at least as large as the number of factors.The crucial dimensionality issue is hence not the relative number of goods and factors per se, but the number of international markets relative to the number of factors. Only the price version of the Heckscher-Ohlifl theorem fails to be essentially preserved by this condition.
Published: Ethier, Wilfred J. and Lars E.O. Svensson. "The Theorems of International Trade with Factor Mobility," Journal of International Economics, vol. 20, 1986, pp. 21-42.