Question

Explain what the differences and similarities between the specific-factor model and Heckseher Ohlin model in terms of trade equilibrium and the relative returns of factors of production are?

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Answer 1

Heckseher Ohlin model is a long run model because both the factors, capital and labour are assumed to be mobile. But the specific factor model is a short run model in which the factors like capital and land inputs are fixed and only the labour will be variable in production.

In specific factor model one factor of production will be specific and same for an industry and in Heckseher Ohlin model a country exports that factor of production which it has in abundance.