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

question 47

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?

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Definitions:

Confounding

A situation in statistical analysis where the effect of a primary independent variable on a dependent variable is mixed with the effect of another variable.

Sugar Consumption

The amount of sugar ingested by an individual or population within a given timeframe.

Weight Gain

An increase in body weight over a period of time, which can result from an excess of calorie intake over calorie expenditure.

Double-Blind Experiment

An experimental design in which neither the participants nor the experimenters know which participants are in the control group and which are in the experimental group, until after the results are collected, to reduce bias.