Specific Factors Model

The Specific Factors Model explains how countries produce goods using both factors of production: some that can move easily between industries (like labor) and others that are fixed in specific industries (like land or specialized equipment). When a country opens to trade, industries with specific factors may benefit or suffer depending on whether their products become more or less competitive. The model helps explain the distribution of gains from trade and how different groups within a country are affected, highlighting that not all sectors or factors gain equally from international trade.