The Heckscher-Ohlin Model Is Famous for Being Elegant and Mathematically

question 11

Essay

The Heckscher-Ohlin model is famous for being elegant and mathematically sophisticated, yet failing to describe reality. One manifestation of this fact is Trefler's Case of Missing Trade. Explain what exactly is missing. In what sense is it missing?
How would you explain why it is missing?
How can a relaxation of the identical production functions explain the case of the missing trade?
How did the results obtained by Davis and Weinstein strengthen support for the validity of the HO model?

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Definitions:

Accounting Equation

The foundational equation in accounting that represents the relationship between assets, liabilities, and owners' equity, expressed as Assets = Liabilities + Owners' Equity.

Electric Bill

A monthly charge for the consumption of electricity, typically issued by an electricity provider.

Accounting Equation

The foundational equation in accounting, representing the relationship between assets, liabilities, and equity (Assets = Liabilities + Equity).

Supplies

Consumable items or materials used in the daily operations of a business or for the completion of a task.