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Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise

Here: preliminary and incomplete

The beginning:

One of the basic building blocks of the political economy of international trade is the Stolper-Samuelson result: the shift from no trade to free trade is good for the owners of the abundant factor of production, but bad for the owners of the scarce factor of production.

This accounts for why support for free trade tends to be stronger in democratic than in authoritarian regimes. The scarce factor of production tends to be, well, scarce. Hence not many potential voters own a lot of it. Hence the political support for trade protection in any system of government that gives weight to broad as opposed to strong preferences will tend to produce trade liberalization.

In the United States, and to some degree in western Europe, things are widely thought to be different--or so the argument goes, The abundant factors of production are things like capital, organization, and technology, which have concentrated ownership. The scarce factor of production is labor. Hence free trade tends to be politically unpopular because it is not in the interest of the majority of potential voters.

This argument of an inconsistency between free trade and the well-being of the majority of potential voters rests substantially on the two-factor example of the Stolper-Samuelson result. The theory does not fare too well when we generalize to a situation in which there are a number of different factors...

Somebody must have done this before. But I cannot find it anywhere...