Specific Factors Model

  

The specific factor model was presented by Paul Samuelson and Ronald Johns in 1971. It assumes an economy that produces two goods and that can allocate its labor supply between two sectors. The model allows for the existence of factors of production beside labor. Where as labor is a mobile factor and it can move between sectors, other factors are assumed to be specific, and they can be used only in the production of particular goods. The specific factor model assumes that each of the specific factors capital and land can be used in only sector, manufactures and food, respectively. Only labor can move in either sectors. Thus to analyze the economy’s production possibilities, it is necessary to ask how the economy’s mix of output changes as labor is shifted from one sector to the other. In the specific factor model, factors specific to export sectors in each country gain from trade, while factors specific to import competing sectors lose. Mobile factors that can work in either sector may either gain or lose. Nonetheless, trade provides overall gains in the limited sense. Thus the model provides detailed description of income distribution effects of international trade