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Canada and Mexico: Suppose two countries, Canada and Mexico, produce two goods, timber and televisions. Assume that land is specific to timber, capital is specific
Canada and Mexico: Suppose two countries, Canada and Mexico, produce two goods, timber and televisions. Assume that land is specific to timber, capital is specific to televisions, and labor is free to move between the two industries. When Canada and Mexico engage in free trade, the relative price of televisions falls in Canada and the relative price of timber falls in Mexico.
Isit possible toredistribute incomeso that everyone gains from trade in Canada and Mexico?
NO, YES, or Only if the economy is relatively capital abundant?
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