On the existence and characterization of unequal exchange in the free trade equilibrium

As in Roemer (1982, chapter 1), this paper considers a Marxian Heckscher-Ohlin model of subsistence international economies with a simple Leontief production technique and examines the existence and characterization of free trade equilibria involving the unequal exchange of labor (UEL). The paper provides an almost complete characterization of the domain of economies in which free trade equilibria with incomplete specialization exist. Moreover, the necessary and sufficient condition for a free trade equilibrium to involve UEL is identified.