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GTAP Resource #2935

"GTAP 7 Data Base Documentation - Chapter 12.A: Primary Factor Shares"
by Hertel, Thomas, Marinos Tsigas and Badri Narayanan

In versions 1 - 3 of the GTAP Data Base, there was only one type of natural resource endowment identified, namely agricultural land. Because this factor was only used in agricultural production, it was also, by default, a sector-specific factor. The presence of a specific, or fixed, factor serves to dampen the supply response in the sector in question. When demand increases, part of that increase is translated into increased land rents. Indeed, the only way to increase agricultural output is to substitute other factors of production for land. This type of situation stands in sharp contrast to some manufacturing activities, say the production of wearing apparel, where supply can be increased indefinitely — provided the demand is there — by simply building new factories and hiring more workers. The only thing that forces the supply curve for such a sector to slope upward is the fact that as additional workers are bid away from other activities, wages will rise. This is a general equilibrium supply constraint.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP 7 Data Base Documentation
Status: Published
By/In: Center for Global Trade Analysis
Date: 2008
Created: Batta, G. (1/27/2009)
Updated: Batta, G. (1/27/2009)
Visits: 5,496
- The GTAP Data Base and extensions

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