Factor Intensities and the Shape of the Production Possibility Curve

In the study of the two-factor two-good Heckscher-Ohlin-Samuelson model of comparative advantage and trade there has been some discussion of the effects of changes in the parameters of the commodity production functions-factor intensities and the elasticity of substitution-on the shape and location of the transformation curve (see Savosnick, 1958; Melvin, 1971, and Krauss, Johnson and Skouras, 1973). Unfortunately, there is an error in one recent analysis of the effects of a shift in the relative factor intensity of production of one or both products: Krauss and Johnson (1974, pp. 92-10 1) following Krauss, Johnson and Skouras (1973), arrive at the erroneous conclusion that any change in factor intensities, whether a widening or narrowing of the inter-industry difference, will pull the transformation curve in towards the origin, except possibly at one terminal point. The purpose of the present note is to correct that analysis. Reference is made to a recent paper by Jones (1979, Chapter 7) which was not available when the original versions of the present paper were written

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• On the Shape and Location of the Production Possibility Curve

  Melvyn B Krauss, Harry G Johnson et al.•Economica•1973

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• General Equilibrium Analysis

  Nobuo Minabe, Melvyn B Krauss et al.•Economica•1975

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• On the Derivation of the Production Possibility Curve

  James R Melvin•Economica•1971

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