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Hokkaido University Collection of Scholarly and Academic Papers >
Graduate School of Economics and Business / Faculty of Economics and Business >
Economic Journal of Hokkaido University >
Vol. 35 >
A Case of Factor Price Equalization under Price Discrimination
| Title: | A Case of Factor Price Equalization under Price Discrimination |
| Authors: | Funatsu, Hideki Browse this author | | Zhao, Laixun Browse this author |
| Keywords: | Tariff protection | | Trade pattern reversal | | Wage inequality | | Factor price equalization |
| Issue Date: | 2006 |
| Publisher: | Graduate School of Economics and Business Administration, Hokkaido University |
| Journal Title: | Economic Journal of Hokkaido University |
| Volume: | 35 |
| Start Page: | 103 |
| End Page: | 113 |
| Abstract: | This simple paper analyzes trade between a competitive country and a monopoly country in a sector-specific factors model. It is shown that the wage rate rises in the competitive country while both wages and profits fall in the monopoly country when trade is opened up. Workers and the monopoly firm in the latter country may lobby for protection, which causes price discrimination and trade pattern reversal. In contrast to conventional wisdom, factor prices are not equalized under free trade but equalized under price discrimination and dumping caused by a high-tariff. (JEL F11, F12, F13) |
| Type: | bulletin (article) |
| URI: | http://hdl.handle.net/2115/14863 |
| Appears in Collections: | Economic Journal of Hokkaido University > Vol. 35
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