Introduction Trade has substantial effects on the income distribution within each trading nation a There are two main reasons why international trade has strong effects on the distribution of income Resources cannot move immediately or costlessly from one industry to another Industries differ in the factors of production they demand a The specific factors model allows trade to affect income distribution Copyright C 2003 Pearson Education, Inc Slide 3-3Copyright © 2003 Pearson Education, Inc. Slide 3-3 Introduction ▪ Trade has substantial effects on the income distribution within each trading nation. ▪ There are two main reasons why international trade has strong effects on the distribution of income: • Resources cannot move immediately or costlessly from one industry to another. • Industries differ in the factors of production they demand. ▪ The specific factors model allows trade to affect income distribution