The comparative statics of industry-level produced-input-use in HOS trade theory

Steedman, Ian (2005) The comparative statics of industry-level produced-input-use in HOS trade theory. Review of political economy, 17 (3). pp. 465-470. ISSN 1465-3982

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Abstract

We consider the industry-level use of inputs, per unit of gross output, in a Heckscher–Ohlin–Samuelson model in which not only land and labour but the two produced commodities are used as inputs. The rate of interest is zero throughout and all the standard assumptions are made. When alternative equilibria are compared, the use of land (of labour) is always lower when the real rent (real wage) is higher. But even the assumption of Hicksian substitution everywhere does not permit comparable conclusions concerning the use of produced inputs. This is because a produced input can never become more expensive relative to all three other inputs (unlike a primary input).