Treflers case of missing trade, International Economics

Assignment Help:

Q. The Heckscher-Ohlin model is famous for being elegant and mathematically sophisticated, yet failing to define reality. One manifestation of this fact is Trefler's Case of Missing Trade. Illustrate what exactly is missing. In what sense is it missing? How could you explain why it is missing? How will a relaxation of the identical production functions explain the case of the missing trade?

Answer: Trefler demonstrated that the real volume of world trade is significantly less than that which would be predicted by the Heckscher-Ohlin model. One description is that North-South trade is especially less than would be predicted by a factor proportions model. If technologies be different in the poorer countries then it is possible that the cost of producing a product which uses relatively much of their abundant factor may still be higher than the cost of producing it in the other country.


Related Discussions:- Treflers case of missing trade

How does fall in real interest rate affect consumption, Q. Consider the eco...

Q. Consider the economy is initially consuming along the intertemporal budget constraint at point A, where no saving occurs. How does a fall in the real interest rate, r, and affe

What are the main functions of money, Q. What are the main function...

Q. What are the main functions of money? Answer: Money serves generally three important functions that are a unit of account, a medium of exchange and a store of value.

Show albanias comparative advantage, Q. Now, consider that the relative pr...

Q. Now, consider that the relative price of A is actually not higher than Albania's autarkic level of 1, but quite the opposite (e.g. PA/PB = 0.5). Could Albania still be able t

International monetary system during the post-world war, Q. How did the int...

Q. How did the international monetary system influence macroeconomic policy-making and performance during the post-World War II years during which exchange rates were fixed under t

Balance of payments accounts, Q. "The balance of payments accounts seldom b...

Q. "The balance of payments accounts seldom balance in practice." Discuss. Answer: True the major reasons are due to the fact that data received or collected from different so

Analyze the effects of an increase in the u.s. money supply, By Using the f...

By Using the figure describing both the U.S. money market and The foreign exchange market, analyze the effects of an increase in the U.S. money supply on the dollar or euro exchang

Herbeler''s increasings cost doctrine, How do countries gain under the incr...

How do countries gain under the increasing cost assumptions

Social Networking Sites, What is the learning of International Economics to...

What is the learning of International Economics to the social networking sites

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd