Regions may share factors of production, too: Implementation of topologies within the World Trade Model

The World Trade Model (WTM), which incorporates input - output data and minimizes global factor costs subject to satisfying demands while being constrained by each region's factor endowments, is one of models based on the principle of comparative advantage. These factor endowments are not neces...

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Published inEconomic systems research Vol. 36; no. 1; pp. 46 - 69
Main Authors Dilekli, Naci, Cazcarro, Ignacio, Sánchez-Chóliz, Julio
Format Journal Article
LanguageEnglish
Published Routledge 02.01.2024
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ISSN0953-5314
1469-5758
DOI10.1080/09535314.2023.2272213

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Abstract The World Trade Model (WTM), which incorporates input - output data and minimizes global factor costs subject to satisfying demands while being constrained by each region's factor endowments, is one of models based on the principle of comparative advantage. These factor endowments are not necessarily fixed in each region as traditionally posed in most theories, but rather can or de facto be shared across regions. We highlight the importance of this feature for economic modeling, and then introduce an extension for the integration of topological rules into WTM to facilitate the sharing of factors with directionality (one-way or two-way) across regions. A series of numerical examples illustrating a range of sharing scenarios is demonstrated to facilitate an examination of this extension's features. Finally, we discuss the most interesting cases in which this topology can be used, as well as the additional challenges or implementations that can be derived from this work.
AbstractList The World Trade Model (WTM), which incorporates input - output data and minimizes global factor costs subject to satisfying demands while being constrained by each region's factor endowments, is one of models based on the principle of comparative advantage. These factor endowments are not necessarily fixed in each region as traditionally posed in most theories, but rather can or de facto be shared across regions. We highlight the importance of this feature for economic modeling, and then introduce an extension for the integration of topological rules into WTM to facilitate the sharing of factors with directionality (one-way or two-way) across regions. A series of numerical examples illustrating a range of sharing scenarios is demonstrated to facilitate an examination of this extension's features. Finally, we discuss the most interesting cases in which this topology can be used, as well as the additional challenges or implementations that can be derived from this work.
Author Cazcarro, Ignacio
Sánchez-Chóliz, Julio
Dilekli, Naci
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Snippet The World Trade Model (WTM), which incorporates input - output data and minimizes global factor costs subject to satisfying demands while being constrained by...
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SubjectTerms Codes: C67
Factors of production sharing
Globalization
Input - output
International trade
World Trade Model
Title Regions may share factors of production, too: Implementation of topologies within the World Trade Model
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