A REEXAMINATION OF THE NEOCLASSICAL TRADE MODEL UNDER UNCERTAINTY

This paper presents a model that pinpoints the exact places and reason s that the propositions of the Heckscher-Ohlin-Samuelson model break d own under uncertainty. Within the model, if preferences exhibit decrea sing absolute risk aversion, (i) a capital-poor country tends to obtai n lower revenues from its resources than the same resources would yiel d in capital-rich countries, (ii) if there is one riskless and one ris ky sector, a capital-abundant country tends to have a comparative adva ntage in the risky sector, and (iii) the pattern of trade depends on t he intranational as well as the international distribution of endowmen ts.