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?

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Definitions:

Iris

The colored part of the eye that controls the size of the pupil and the amount of light reaching the retina.

Colored Part

The iris, the circular structure in the eye responsible for controlling the diameter and size of the pupils and thus the amount of light reaching the retina.

Pupil Size

The diameter of the circular opening in the center of the iris of the eye, which can vary in response to light exposure or emotional state.

Trichromatic Theory

Theory stating that color perception is produced by three types of cone receptors in the retina that are particularly sensitive to different, but overlapping, ranges of wavelengths.