ON THEOREMS OF GENERAL COMPETITIVE EQUILIBRIUM OF PRODUCTION AND TRADE : A SURVEY OF SOME RECENT DEVELOPMENTS IN THE THEORY OF INTERNATIONAL TRADE

Abstract

The purpose of this paper is to survey the theoretical structure of some recent developments in international trade such as the Heckscher-Ohlin-Samuelson model, the specific factor model, the general discussion of the three factor, two commodity model with an explicit recognition of the complementaritysubstitutability relationship among three factors, etc., using the general perspective of an m factor, n commodity model obtained recently by Chang (1979) ., Jones-Scheinkman (1977), and others.The application of the m x n model which has attracted a great deal of attention recently is not limited to international trade ., as Diewert-Woodland study (1977) on the Knight-Samuelson theorem demonstrates.In fact, it is a modern version of the well-known Walras-Cassel model of general competitive equilibrium of production.As such, it naturally has a very wide scope of applications which is not confined to international trade theory .while recent developments in international trade theory would naturally provide a. stimulation to study such a general model.In Section, 1, we shall briefly describe a recent development in the theory of comparative advantage, which should provide some background for the topics discussed in the present paper.This, in part, is also intended to motivate the discussions of the rest of the paper.Section 2 deals with the discussion of a general competitive model of production for the general m x n case.Section 3 obtains the basic results in the Heckscher-Ohlin-Samuelson 2 x 2 model as a special case of the m x n model.Section 4 treats the three factor, two commodity model (which includes the specific factor model) in the general m x n context.Section 5 discusses the theory of comparative advantage (including the Heckscher-Ohlin theory) in the context of a general framework developed earlier.This paper is complete with four appendices.Appendix A is concerned with the derivation of the properties of the substitution matrix of the m x n model of production.Appendix B discusses the relevance of such a model to an optimization scheme.The envelope theorem

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