Free trade commodities has often been considered to lead to the optimum allocation of resources between countries. If factor returns are not equalized by such trade, further gains can be obtained by allowing national factors access to world markets. But if technology, in the form of blueprints,...

All markets in which production takes place are vertical. That is, inputs are transformed into outputs. Of central concern, in this paper is a situation in which an input and an output both are traded on international markets.