Question: Consider the BlancoTinto example studied in Section 18.3.4. Describe a case where some individuals in Blanco might object to a free-trade agreement and show that

Consider the Blanco–Tinto example studied in Section 18.3.4. Describe a case where some individuals in Blanco might object to a free-trade agreement and show that this case must depend critically on the assumption that factor inputs are held unequally by different citizens. Note that even in this case, the only objection comes from the higher wine price, which is typically small, because it is distributed over the entire body of consumers. This is very different from input-side effects, as in the Heckscher–Ohlin model, which are concentrated on particular groups of people.

Step by Step Solution

3.44 Rating (151 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

In the BlancoTinto example studied in Section 1834 Blanco is a small country that produces both wine and textiles The country has a comparative advant... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Development Economics Questions!