public affairs 856 trade, competition, and governance in a...

Public Affairs 856Trade, Competition, and

Governance in a Global EconomyLecture 2-3

1/25-27/2016

Instructor: Prof. Menzie ChinnUW MadisonSpring 2016

Technological Parameters

• MPLw = 4• MPLc = 2• MPLw* = 1• MPLc* = 1

Robert C. Feenstra and Alan M. TaylorInternational Trade, Third Edition / International Economics, Third Edition

Real Wage Determination

• Note that Pw/Pc is relative price = 2/3• Home Wage• MPLw = 4 bushels or • (Pw/Pc)×MPLw = 8/3 yards• Foreign Wage• (Pc*/Pw*)×MPLc* = 3/2 bushels or• MPLc* = 1 yard

public affairs 856 trade, competition, and governance in a...

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