One of the Commonly Used Assumptions in Deriving the Heckscher-Ohlin

question 18

Essay

One of the commonly used assumptions in deriving the Heckscher-Ohlin model is that tastes are homothetic, or that if the per capita incomes were the same in two countries, the proportions of their expenditures allocated to each product would be the same as it is in the other country. Imagine that this assumption is false, and that in fact, the tastes in each country are strongly biased in favor of the product in which it has a comparative advantage. How would this affect the relationship between relative factor abundance between the two countries, and the nature (factor-intensity) of the product each exports?
What if the taste bias favored the imported good?

---

Definitions:

Tinnitus

Ringing heard in one or both ears.

Swayback

A postural condition characterized by an exaggerated inward curve of the lower back, leading to a forward tilting of the pelvis.

Spoon Nails

A nail disorder characterized by a concave, spoon-like shape of the fingernails or toenails, it can indicate iron deficiency or other health issues.

Venous Problems

Medical issues related to the veins, which may include conditions like varicose veins, venous insufficiency, or deep vein thrombosis.