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Bertil ohlin
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Factor intensity
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H-O model
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Effect of
international trade on factor earnings and income distribution
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Same technology
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X is L-intensive
and Y is K-intensive
52.
Constant returns to
scale
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Incomplete specialization
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Equal tastes
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Perfect competition
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Internal factor mobility
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No transportation costs
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All resources are
fully employed
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PA less than
PA’
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With trade
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Nation1 specialises in
X and moves from A to B
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New IC
both nations will benefit.
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