Substitution of Final Products

Abstract

The considerations in the last chapter led to the conclusion that it is useful to differentiate between international trade without the possibility of reallocating production means and the situation when their re-allocation is possible. So far the general assumption was that the data selected for this differentiation should correspond as closely as possible to reality, so that the theory of international trade does not become a ‘system of assertions’ without any empirical meaning. From a methodological point of view, the difference is of practical importance, as in the various situations there is a different solution to fundamental problems regarding the optimum external exchange relation, the degree of production specialization and the size of international trade. This chapter deals with the search for a solution to these three questions in the event of absence of re-allocation.