TD n. 610 2013
Yves Balasko.
The Heckscher-Ohlin model with arbitrary number of goods, factors and
countries (consumers) and no restrictions on factor trading is shown to be
equivalent to an exchange model whose goods are the productive factors while
consumer’s indirect demands for factors are derived from their actual demands
for consumption goods. This equivalence enables one to import properties like
the pathconnectedness of the equilibrium manifold, the uniqueness of equilibrium
for sufficiently small volumes of trade and discontinuities of equilibrium
selection maps for large volumes of trade into the Heckscher-Ohlin model.
This equivalence also provides the proper theoretical background to the important
but so far purely empirical role played in international trade by the
volume of net trades in factor contents.