International Trade with Three Factors, Goods or Countries

Three is the smallest number for illustrating some properties of the theory of production and trade. The number two is convenient but leads to incomplete intuition. The present paper synthesizes the literature on high dimensional trade theory ancl presents some new results using models with three factors, goods, or countries. The theory of production and trade is two dimensional, based on exports and imports.. traded goods and nontraded goods, capital and labor, home and foreign countries, and. so on. Most theorems are proven under assumptions of two. While high dimensional models with many factors and many goods have been studied, generalizations from twcl dimensional trade theory have been scarce. The present paper focuses on the first step from two to many, namely three, where some concrete properties emerge. The higher dimensional literature is summarized in terms of three factors and three goods, and new results due to relabelling factors and goods are presented. Possible patterns of trade with three goods between three countries are derived.