The Samuelson and Jones Model

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The Samuelson and Jones Model 2018-04-04T08:44:44+00:00

The Samuelson and Jones Model

According to Samuelson–Jones Model, the two major reasons for which trade influences the income distribution are as follows: Resources are non-transferable immediately and without incurring costs from one industry to another. Industries use different factors. The change in the production portfolio of a country will reduce the demand for some of the production factors. For other factors, it will increase it. There are three factors in this model: Labor (L), Capital (K), and Territory (T). Food products are made by using territory (T) and labor (L), while manufactured goods use capital (K) and labor (L). It is easy to see that labor (L) is a mobile factor and it can be used in both sectors. Territory and capital are specific factors. A country with abundant capital and a shortage of land will produce more manufactured goods than food products, whatever may the price be. A country with territory abundance will produce more foods.

 

 

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