The Classical Model and the Specific Factors Model

Abstract

In this chapter we shall examine the classical model more formally than in Chapter 1, and will use that model to discuss the effects of the move to free trade on real wages in the two countries. We shall then examine the specific factors model, which may be thought of in one way as a logical generalisation of the classical model, certainly in that we may use similar techniques in deriving the production-possibility curve. Although the specific factors model only entered the literature fairly recently, some economists have argued that it is in fact the model used by the classical economists in their discussion of the economic effects of the Corn Laws.