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Economy-wide substitution and Rybczynski sign pattern in a three-factor two-good model: Further analysis

Nakada, Yoshiaki (2015): Economy-wide substitution and Rybczynski sign pattern in a three-factor two-good model: Further analysis.

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Abstract

The position of EWS-ratio vector determines Rybczynski sign pattern, and hence, Stolper-Samuelson sign pattern in a three-factor two-good general equilibrium trade model (see Nakada (2015)). EWS-ratio vector can be defined based on EWS (or economy-wide substitution). In this article, I develop a method to estimate the position of EWS-ratio vector to some extent. Especially, I derive a sufficient condition for extreme factors to be economy-wide complements. We assume factor intensity ranking is constant. The results suggest that if we have appropriate data, we can estimate the position of EWS-ratio vector to some extent. The results are useful for application.

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