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Factor intensities and factor substitution in general equilibrium: A Comment

Nakada, Yoshiaki (2015): Factor intensities and factor substitution in general equilibrium: A Comment.

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Abstract

Jones and Easton (1983) analyzed how commodity prices affect factor prices in the three-factor two-good general equilibrium trade model. These relationships determine whether ‘a strong Rybczynski result’ holds or not. In subsection 5.2.4., they found that the set of three equations holds for ‘the economy-wide substitution’ under the assumption of ‘perfect complementarity’. And they applied this to their analysis. In the following, I demonstrate that this is impossible, hence their proof is not plausible. In subsection 5.2.5., they analyzed similarly. But their proof is not plausible, either.

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