Deardorff, Alan V; Courant, Paul N - In: International Economic Review 31 (1990) 3, pp. 589-96
It is argued that nontraded goods reduce the likelihood of factor price equalization. Specifically, the addition of nontraded goods to a small, open-economy Heckscher-Ohlin model with any number of goods reduces the size of the cone of diversification by the fraction of income spent on nontraded...