Capital Utilization in the Heckscher–Ohlin Model With a Continuum of Goods

This paper introduces endogenous capital utilization into the Dornbusch-Fischer-Samuelson model of a continuum of goods, shows the conditions under which factor-price equalization can occur, and describes the possible patterns of trade. For some patterns of trade the paper explores the effects of factor endowments and workers' shift-work preferences on trade, factor prices and the level of capital utilization. Some of the paradoxes in the prior literature on trade models with endogenous utilization are found to be less likely in continuum-of-goods framework. [410]