International Trade in Goods and Factor Mobility
Kar-yiu Wong.

Cambridge, Mass.: MIT Press, 1995. Pp. xiv, 699. ISBN 0–262–23179–4. Second printing, 1997.

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Table of Contents



1 Introduction

1.1 Introduction
1.2 Factor Content of Trade
1.3 Interactions between Trade in Goods and Factor Mobility
1.4 International Factor Mobility with External Economies of Scale
1.5 International Factor Mobility with Monopolistic Competition
1.6 International Factor Mobility with Oligopoly
1.7 Multinational Corporations and Foreign Direct Investment
1.8 International Labor Migration
1.9 Other Features of This Book
1.10 Structure of This Book
1.11 Rising Significance of International Trade in Goods and Factor Movements


2 General Equilibrium with Constant Returns and Perfect Competition

2.1 The Two-Factor, Two-Sector Framework
2.2 Unit Cost Function and Input-Output Coefficients
2.3 The Stolper-Samuelson and the Rybczynski Theorems
2.4 The Gross Domestic Product (GDP) Function
2.5 The Ricardian Model
2.6 The Specific-Factors Model
2.7 Consumption Demand
2.8 Direct and Indirect Trade Utility Functions 2.9 Stability of Equilibrium
2.10 The Offer Curve
2.11 International Trade Equilibrium

3 Comparative Advantages and Factor Content of Trade

3.1 Natural Trade
3.2 The Law of Comparative Advantage
3.3 The Factor Endowment Theory of Comparative Advantage
3.4 Goods Trade and Factor Prices
3.5 Are Goods Trade and Factor Mobility Substitutes?
3.6 The General Law of Comparative Advantage
3.7 Chain Version of Comparative Advantage
3.8 Different Concepts of Factor Content of Trade
3.9 Factor Content of Trade for a Single Economy
3.10 Factor Content of Trade with Possibly Unequal Factor Prices
3.11 Actual Factor Content of Trade with Equal Factor Prices
3.12 The Leontief Paradox and Factor Content of Trade
3.13 International Factor Movements and Factor Content of Trade
3.14 Factor Accumulation and Dynamic Comparative Advantage

4 International Goods Trade and Capital Movement

4.1 The Fundamental Trade Theorems in the Presence of Capital Movement
4.2 Free Goods Trade and Capital Movement
4.3 Two Graphical Apparatuses
4.4 The Chipman Flat and Equilibrium with Diversification
4.5 More Conditions for an Efficient Production with Diversification
4.6 Stability of Equilibrium
4.7 Are Goods Trade and Factor Mobility Substitutes?
4.8 Patterns of Trade under International Capital Movement
4.9 Comparative Advantage and Absolute Advantage
4.10 International Capital Movement with Sector-Specific Capital


5 External Economies of Scale

5.1 External Effects in Production
5.2 Output-Generated External Effects
5.3 Prices, Output Levels, and Factor Endowments
5.4 Stability of Production Equilibrium
5.5 Autarkic Equilibrium
5.6 Foreign Trade under National Economies of Scale
5.7 Patterns of Trade
5.8 Factor Prices under Free Trade
5.9 International Factor Movement
5.10 International Economies of Scale

6 Monopolistic Competition and Intraindustry Trade in Differentiated Products

6.1 Preferences
6.2 Production
6.3 A Closed Economy
6.4 Effects of Factor Accumulation
6.5 Free Trade in Goods
6.6 Volumes of Trade
6.7 International Factor Movement with Differentiated Products
6.8 Commodity Trade and Factor Movement

7 Oligopoly and Intraindustry Trade in Identical Products

7.1 Cournot Competition with No Arbitrage: The Basic Model
7.2 Free Entry and Exit
7.3 Cournot Competition with Arbitrage: Zero Transport Cost
7.4 Cournot Competition with Arbitrage and Positive Transport Cost
7.5 Bertrand Competition with a Homogeneous Product
7.6 Oligopoly and General Equilibrium
7.7 Trade with Oligopoly: A General Equilibrium Approach
7.8 Validity of the Fundamental Trade Theorems
7.9 Factor Mobility and Commodity Trade


8 Core Theorems of the Welfare Economics of International Trade

8.1 The Pareto Approach to Welfare Comparison
8.2 The Social-Welfare Approach to Welfare Comparison
8.3 The Social-Utility Approach to Welfare Comparison
8.4 The Lump-sum Compensation Approach to Welfare Comparison
8.5 The Consumption-Taxation Compensation Approach to Welfare Comparison
8.6 Comparing Different Approaches to Measuring Welfare
8.7 The Core Theorems of Welfare Economics in International Trade
8.8 Welfare of a Single Economy: The Case of Free Trade
8.9 Welfare of a Single Economy: The Case of Restricted Trade
8.10 Welfare of the World

9 Gains from Trade for Economies with Imperfections

9.1 External Economies of Scale
9.2 Monopolistic Competition with Differentiated Products
9.3 Oligopoly with Identical Products
9.4 Pareto-Inferior Trade When Markets are Incomplete
9.5 Gain from Compensated Trade with Incomplete Markets
9.6 Pareto-Inferior Trade with Overlapping Generations
9.7 Gain from Compensated Trade with Overlapping Generations


10 Theory of Distortions and Optimal Policy Intervention

10.1 A Planner's Problem
10.2 Optimality of a Competitive Equilibrium
10.3 Types of Distortions
10.4 Optimal Policy Intervention
10.5 Theory of Second Best and Piecemeal Policy Recommendations
10.6 Immiserizing Growth
10.7 External Economies of Scale
10.8 Monopolistic Competition and Differentiated Products

11 Commercial Policies with Trade in Goods and Factor Mobility

11.1 Effects of Protection
11.2 Optimal Protection
11.3 Can Optimal Taxes Be Negative?
11.4 An Alternative Approach to Analyzing Protection
11.5 Capital Movement under Optimal Goods Trade
11.6 Capital Movement for a Large Open Economy under Free Trade in Goods
11.7 Capital Movement for a Small, Protected Economy
11.8 Choosing between Capital Mobility and Labor Mobility: Duty-Free Zones

12 Strategic Trade Policies

12.1 Optimal Policies in the Presence of Oligopolistic Industries
12.2 Policies for the Home Market
12.3 Policies for the Foreign Market
12.4 Some Extensions
12.5 Further Arguments against Export Subsidies
12.6 Nonequivalence of Tariffs and Quotas
12.7 Voluntary Export Restraints and Oligopolistic Firms
12.8 Retaliation and Trade War with Competitive Industries
12.9 Retaliation and Trade War with Oligopolistic Industries
12.10 Alternatives to Trade Wars
12.11 Strategic Choice between Capital Mobility and Labor Mobility


13 The Multinational Corporation

13.1 Some Basic Concepts
13.2 Ownership Advantages
13.3 Choosing between Export and Foreign Direct Investment?
13.4 Tariff-Jumping FDI
13.5 To Invest or to License: The Theory of Internalization
13.6 Quid Pro Quo Direct Investment: The Political-Economy Context
13.7 Multinational Corporations and Market Power
13.8 Technology Transfer and Diffusion

14 International Labor Migration

14.1 Features of International Labor Migration
14.2 Emigration and the Welfare of Those Left Behind
14.3 Emigration with Constant Factor Prices
14.4 Government Policies in the Presence of Permanent Emigration
14.5 External Effects
14.6 Temporary Migration and Guest Workers
14.7 The Problem of Brain Drain
14.8 Learning by Doing and International Migration
14.9 Education, Human Capital Formation, and International Migration
14.10 Illegal Migration



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