By H.Peter Gray
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Additional info for A Generalized Theory of International Trade
The difference between the flows of the two types of input is partly dependent upon the 21 See Hufbauer, op. , pp. 21-23 and M. V. Posner's seminal article, 'international Trade and Technical Change,' Oxford Economic Papers (October 1961) pp. 323-41. 2 2 R. N. Batra and F. R. Casas, 'Intermediate Products and the Pure Theory of International Trade: A Neo-Heckscher-Ohlin Framework,' American Economic Review LXIII Uune 1973), pp. 297-311. The Shortcomings of the Orthodox Theory 25 reversibility of the flow and partly upon the speed with which the flow can be generated.
In the same way, attempts to offset the impact of international forces on domestic income distribution will have a secondary effect. Neither of these phenomena is likely to be of first-order magnitude that will warrant inclusion in the core theory. The preservation of a manageability in the core theory is vital. The criticisms apply, importantly, only to specialized analyses. They are, then, explicit warning to theorists using the core theory for particular purposes, that the intent of the analysis and the core theory may be incompatible.
Such goods are differentiated from each other by virtue of design, quality and selling-price differences but they are so closely competitive that they merit analysis as a group rather than as individual commodities. 1 5 The assumption of homogeneity makes price the unique determinant of trade. For differentiated goods competing in imperfect markets, price differences are no longer paramount. Because of the distinctions among goods, each good faces its own negatively sloped demand curve in each country.
A Generalized Theory of International Trade by H.Peter Gray