Non-competing factor groups and the normative propositions of trade theory

Murray Kemp

Research output: Contribution to journalArticle

Abstract

The Walras–Arrow–Debreu–McKenzie model of general equilibrium forms the basis of almost all normative trade theory. In that model, a factor of production might be completely or incompletely immobile between alternative occupations. Whether it ever abandons an initial occupation depends on the cost of moving to each of the alternative occupations. It is not to be expected that, in equilibrium, a factor will receive the same reward in each occupation; non-competitive factor groups will be the rule. It is puzzling then that, in recent years, normative trade theory has developed in complete denial of non-competing groups. It is here shown that the occupational immobility of factors does not endanger any of the well-known normative propositions of the theory of international trade.
Original languageEnglish
Pages (from-to)388-390
Number of pages3
JournalInternational Review of Economics and Finance
Volume17
Issue number3
DOIs
Publication statusPublished - 2008

Keywords

  • Normative trade theory
  • Non-competing factor groups
  • Factor immobility

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