The Stolper-Samuelson Theorem in the Presence of Domestic Distortions

Abstract

This paper intends to show that in the presence of domestic distortions, the factor used intensively in the expanding industry could be worse off even though the real return to the factor in both the expanding industry and the contracting industry is increased. On the other hand, in the presence of domestic distortions, the factor used intensively in the contracting industry could be better off even though the real return to the factor in both the expanding industry and the contracting industry is decreased.