Preprint Article Version 2 This version is not peer-reviewed

Trade Effects Based on Trade Equilibrium

Version 1 : Received: 14 November 2018 / Approved: 16 November 2018 / Online: 16 November 2018 (07:57:27 CET)
Version 2 : Received: 27 February 2019 / Approved: 27 February 2019 / Online: 27 February 2019 (05:19:48 CET)

A peer-reviewed article of this Preprint also exists.

Baoping GUO, 2019. "Trade effects based on general equilibrium," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(618), S), pages 159-168, Spring. Baoping GUO, 2019. "Trade effects based on general equilibrium," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(618), S), pages 159-168, Spring.

Journal reference: Theoretical and Applied Economics 2019, 618, 159-168
DOI: a1381

Abstract

The Rybczynski theorem describes the trade effect within production analyses between factor endowments and outputs. The Stolper-Samuelson theorem focuses on cost analyses between factor reward and commodity price. This paper examines the trade effect of changes of factor endowments on prices, based on general equilibrium. The study shows that changes of factor endowments cause domestic output changes (the Rybczynski effect), which affect output prices and factor prices (the Stolper-Samuelson effect). It is like a chain of effects that the Rybczynski’s trade effect triggers the Stolper-Samuelson’s trade effect. The analysis of this paper shows that a small increase of a factor endowment of any country rewards another factor and the commodity using the latter factor intensively. It displays a tuneful circle. Trade brings a well-balanced development to the world.

Subject Areas

E; factor price equalization; Heckscher-Ohlin; equilibrium price; equalized factor price

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