Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models

Mundell and Markusen each wrote classic papers on the relationship between trade and factor movement. 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...

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Main Author:	Schiff, Maurice
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	CAPITAL FLOWS CAPITAL INCREASE CHANGES IN TRADE COMPARATIVE ADVANTAGE CONSTANT RETURNS TO SCALE DOMESTIC DISTORTIONS EXPORT GOOD EXPORT GOODS EXPORT SECTOR EXPORTS FACTOR ENDOWMENTS FACTOR MODEL FACTOR PRICE FREE TRADE HIGH TRADE BARRIERS IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPORT SECTOR IMPORTS INTERNATIONAL ECONOMICS INTERNATIONAL TRADE LDCS LOW TARIFF M1 M2 M3 PATTERN OF TRADE PERFECT COMPETITION POLICY RESEARCH PROTECTION RATES TARIFF INCREASES TARIFF RATE TARIFF RATES TARIFF REDUCTION TERMS OF TRADE TRADE BARRIER TRADE BARRIERS TRADE FLOWS TRADE IN GOODS TRADE LIBERALIZATION TRADE POLICY UNSKILLED LABOR WAGE RATE
Online Access:	http://documents.worldbank.org/curated/en/2006/08/6944324/substitution-markusens-classic-trade-factor-movement-complementarity-models http://hdl.handle.net/10986/8379

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spelling	okr-10986-83792021-04-23T14:02:41Z Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models Schiff, Maurice CAPITAL FLOWS CAPITAL INCREASE CHANGES IN TRADE COMPARATIVE ADVANTAGE CONSTANT RETURNS TO SCALE DOMESTIC DISTORTIONS EXPORT GOOD EXPORT GOODS EXPORT SECTOR EXPORTS FACTOR ENDOWMENTS FACTOR MODEL FACTOR PRICE FREE TRADE HIGH TRADE BARRIERS IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPORT SECTOR IMPORTS INTERNATIONAL ECONOMICS INTERNATIONAL TRADE LDCS LOW TARIFF M1 M2 M3 PATTERN OF TRADE PERFECT COMPETITION POLICY RESEARCH PROTECTION RATES TARIFF INCREASES TARIFF RATE TARIFF RATES TARIFF REDUCTION TERMS OF TRADE TRADE BARRIER TRADE BARRIERS TRADE FLOWS TRADE IN GOODS TRADE LIBERALIZATION TRADE POLICY UNSKILLED LABOR WAGE RATE Mundell and Markusen each wrote classic papers on the relationship between trade and factor movement. 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. The author generalizes Markusen's analysis by considering the liberalization of barriers to factor movement under any non-negative level of protection, and liberalizing trade barriers under factor mobility. He shows that (1) substitution holds at high protection levels, (2) complementarity holds at low protection levels, and (3) either substitution or complementarity hold under large tariff changes. 2012-06-18T22:05:09Z 2012-06-18T22:05:09Z 2006-08 http://documents.worldbank.org/curated/en/2006/08/6944324/substitution-markusens-classic-trade-factor-movement-complementarity-models http://hdl.handle.net/10986/8379 English Policy Research Working Paper; No. 3974 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CAPITAL FLOWS CAPITAL INCREASE CHANGES IN TRADE COMPARATIVE ADVANTAGE CONSTANT RETURNS TO SCALE DOMESTIC DISTORTIONS EXPORT GOOD EXPORT GOODS EXPORT SECTOR EXPORTS FACTOR ENDOWMENTS FACTOR MODEL FACTOR PRICE FREE TRADE HIGH TRADE BARRIERS IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPORT SECTOR IMPORTS INTERNATIONAL ECONOMICS INTERNATIONAL TRADE LDCS LOW TARIFF M1 M2 M3 PATTERN OF TRADE PERFECT COMPETITION POLICY RESEARCH PROTECTION RATES TARIFF INCREASES TARIFF RATE TARIFF RATES TARIFF REDUCTION TERMS OF TRADE TRADE BARRIER TRADE BARRIERS TRADE FLOWS TRADE IN GOODS TRADE LIBERALIZATION TRADE POLICY UNSKILLED LABOR WAGE RATE
spellingShingle	CAPITAL FLOWS CAPITAL INCREASE CHANGES IN TRADE COMPARATIVE ADVANTAGE CONSTANT RETURNS TO SCALE DOMESTIC DISTORTIONS EXPORT GOOD EXPORT GOODS EXPORT SECTOR EXPORTS FACTOR ENDOWMENTS FACTOR MODEL FACTOR PRICE FREE TRADE HIGH TRADE BARRIERS IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPORT SECTOR IMPORTS INTERNATIONAL ECONOMICS INTERNATIONAL TRADE LDCS LOW TARIFF M1 M2 M3 PATTERN OF TRADE PERFECT COMPETITION POLICY RESEARCH PROTECTION RATES TARIFF INCREASES TARIFF RATE TARIFF RATES TARIFF REDUCTION TERMS OF TRADE TRADE BARRIER TRADE BARRIERS TRADE FLOWS TRADE IN GOODS TRADE LIBERALIZATION TRADE POLICY UNSKILLED LABOR WAGE RATE Schiff, Maurice Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models
relation	Policy Research Working Paper; No. 3974
description	Mundell and Markusen each wrote classic papers on the relationship between trade and factor movement. 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. The author generalizes Markusen's analysis by considering the liberalization of barriers to factor movement under any non-negative level of protection, and liberalizing trade barriers under factor mobility. He shows that (1) substitution holds at high protection levels, (2) complementarity holds at low protection levels, and (3) either substitution or complementarity hold under large tariff changes.
format	Publications & Research :: Policy Research Working Paper
author	Schiff, Maurice
author_facet	Schiff, Maurice
author_sort	Schiff, Maurice
title	Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models
title_short	Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models
title_full	Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models
title_fullStr	Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models
title_full_unstemmed	Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models
title_sort	substitution in markusen’s classic trade and factor movement complementarity models
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/08/6944324/substitution-markusens-classic-trade-factor-movement-complementarity-models http://hdl.handle.net/10986/8379
_version_	1764406371328983040

Substitution in Markusen’s Classic Trade and Factor Movement Complementarity Models

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