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VARIABLE RETURNS TO SCALE IN GENERAL EQUILIBRIUM THEORY.
STANFORD UNIV CALIF INST FOR MATHEMATICAL STUDIES IN THE SOCIAL SCIENCES
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The validity of two standard theorems in the pure theory of international trade the Stolper-Samuelson theorem and the Rybczynski theorem is examined in a competitive general equilibrium model where external economies andor diseconomies are introduced. Either theorem may be invalidated when there exist sufficiently strong external economies or if external effects are sufficiently biased. These findings are related to the shape of the communitys production-possibilities schedule, which can be bowed-in even in the absence of external economies. Author
APPROVED FOR PUBLIC RELEASE