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economic models

Page history last edited by Brian D Butler 14 years, 7 months ago

see also our GloboTrends page on:

 

 

Economic Models for....

 

1.Trade

see GT discussion on international trade

 

  1. "Gravity Model"....Quantity of trade is proportional to size of market, and inversely proportional to distance.
  2. Adam Smith:  Absolute advantage model of trade....
  3. David Ricardo.... comparative advantage based on labor efficiency
  4. The Heckscher-Ohlin model  - took Ricardo's model of Comparative advantage, and added other factors of production...not just labor.....the H-O model is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the factor endowments of a trading region. The model essentially says that countries will export products that utilize their abundant and cheap factor(s) of production and import products that utilize the countries' scarce factor(s).   Read more...http://en.wikipedia.org/wiki/Heckscher-Ohlin_model
  5. product life cycle:The product life-cycle theory is an economic theory that was developed by Raymond Vernon in response to the failure of the Heckscher-Ohlin model to explain the observed pattern of international trade. The theory suggests that early in a product's life-cycle all the parts and labor associated with that product come from the area in which it was invented. After the product becomes adopted and used in the world markets, production gradually moves away from the point of origin. In some situations, the product becomes an item that is imported by its original country of invention.[1] A commonly used example of this is the invention, growth and production of the personal computer with respect to the United States.  read more....http://en.wikipedia.org/wiki/Product_life-cycle_theory

 

 

 

 

 

 

 

More Economic Models:

http://en.wikipedia.org/wiki/Category:Economics_models

 

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