Two classic papers on the relationship between trade and factor movement are Mundell (1957) and Markusen (1983). Mundell showed that substitution holds in the Heckscher-Ohlin model. Markusen challenged the substitution result and showed in five different models that removing barriers to factor movement results in complementarity under free trade, identical factor endowments and a change in any one of the other assumptions underlying the Heckscher-Ohlin model. This paper generalizes Markusen's analysis by considering i) the elimination of barriers to factor movement under any protection level, and ii) a change in trade barriers under free factor movement. I show that substitution holds under high protection, complementarity holds under low protection, and either substitution or complementarity hold for large increases (reductions) of low (high) protection rates.
Schiff, M. (2006). Substitution in Markusen’s classic trade and factor movement complementarity models.
|Citazione:||Schiff, M. (2006). Substitution in Markusen’s classic trade and factor movement complementarity models.|
|Data di pubblicazione:||nov-2006|
|Titolo:||Substitution in Markusen’s classic trade and factor movement complementarity models|
|Appare nelle tipologie:||99 - Altro|