We consider a trade model combining 2x2x2 Heckscher-Ohlin structure, monopolistic competition, transport costs, and multinational corporations. demonstrate how the mix of national firms that operate in equilibrium depends on technology division world endowment between countries. Multinationals are more likely to exist similar countries both relative absolute endowments. Where multinationals the...

In this paper we develop a model of a multi-sector multi-factor small open economy with involuntary unemployment due to fair wages. The model is used inter alia to analyse the labour market effects of changes in unemployment benefits and the domestic labour supply. Our analysis covers both the case where factor prices do not react to endowment changes – as in the Heckscher-Ohlin model – and the...

This study sets out to capture the effect that environmental policy has on trade and specifically then examining the notion that lax environmental regulations will constitute a basis of comparative advantage, causing the least regulated jurisdictions to specialize in polluting industries. This is done partly by a survey of the empirical literature on this subject and partly by performing an eco...

The Heckscher-Ohlin-Vanek (HOV) theorem predicts whether a country will be a net exporter of services of a certain factor and the volume of the factor content of trade given the country's and the world's factor endowment information. Recent empirical work has documented that the measured factor content of trade is too small compared to the theoretical prediction and named this special pattern o...

This paper studies how income inequality affects the probability of signing free trade agreements (FTAs) in a political economy framework. The median voter approach to FTA formation within a Heckscher-Ohlin framework predicts that an increase in inequality lowers the desirability of an FTA if the partner country is relatively labor abundant, ceteris paribus, and raises the desirability of such ...