Factor endowment -- commodity output relationships in a three-factor, two-good general equilibrium trade model

TL;DR

This paper investigates the relationships between factor endowments and commodity outputs in a three-factor, two-good general equilibrium trade model, identifying conditions that determine Rybczynski sign patterns.

Contribution

It introduces a systematic method using EWS-ratio vectors and Hadamard products to determine Rybczynski sign patterns, a novel approach in trade theory analysis.

Findings

Position of EWS-ratio vector determines Rybczynski sign pattern

Provides a sufficient condition for each Rybczynski sign pattern

Establishes a basis for further applications in trade models

Abstract

We analyze the Rybczynski sign pattern, which expresses the factor endowment - commodity output relationships in a three-factor, two-good general equilibrium trade model. The relationship determines whether a strong Rybczynski result holds. We search for a sufficient condition for each Rybczynski sign pattern to hold in a systematic manner, which no other studies have derived. We assume factor-intensity ranking is constant. We use the EWS (economy-wide substitution)-ratio vector and the Hadamard product in our analysis. We show that the position of the EWS-ratio vector determines the Rybczynski sign pattern. This article provides a basis for further applications.