The Heckscher-Ohlin Model Under Uncertainty: An Assessment
Owing to its simplicity and the plausibility of the results that it yields, the two-sector, two-factor, constant returns to scale framework, devised originally by Heckscher and Ohlin to develop a theory of the pattern of trade, has been extensively utilised in the exploration of various issues, some of which not even remotely resemble the question of the trade pattern. Nevertheless, irrespective of the context in which it is used, the two-sector model is generally called the H.O. model. Thus, although the Rybczynski, the Stolper—Samuelson and the factor-price equalisation theorems were discovered by different writers at different points in time, the structure of production underlying each proposition transpired to be the unifying H.O. model. In fact, it would not be inappropriate to say that the H.O. model has come to be identified with the two-by-two apparatus, whether or not the problem under consideration deals with international trade.†
KeywordsInternational Trade Commodity Price Factor Price Trade Pattern Undesirable Property
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