The Specific Factors Model, also known as the Ricardo-Viner Model, helps explain the distributional

effects of trade by focusing on the mobility of factors of production across industries. It highlights
how different factors (specific and mobile) are affected by changes in trade patterns. Here's how the
model explains the distributional effects:
1. Factors of Production: The Specific Factors Model considers three factors of production:
 Capital (K): Refers to physical capital, such as machinery and equipment.
 Labor (L): Refers to the workforce.
 Land (T): Represents natural resources.
2. Specific Factors: In this model, some factors of production are specific to particular
industries. For example, certain workers may have specialized skills that are relevant to a
specific industry, or certain machines may only be suitable for use in specific sectors.
3. Mobility of Factors: The model assumes that capital and land are immobile across industries
in the short run. They are fixed in supply and cannot easily move from one sector to another.
In contrast, labor is assumed to be mobile and can shift between industries.
4. Trade Impact on Industries: When a country engages in trade and specializes in producing
goods based on its comparative advantage, it will tend to expand production in sectors that
utilize its abundant factors of production more intensively.
 Sector Expanding Output: Industries that use the country's abundant factors (e.g., capital-
intensive industries in a capital-abundant country) will expand their output due to increased
trade.
 Sector Contracting Output: Industries that use the country's scarce factors (e.g., labor-
intensive industries in a labor-abundant country) will experience a decrease in output due to
competition from cheaper imports.
5. Distributional Effects: The Specific Factors Model highlights the distributional effects of trade
across factors of production:
 Winners: Factors of production specific to the expanding industries (abundant factors) will
experience an increase in demand and higher returns. For example, capital owners in capital-
intensive industries will benefit from increased trade.
 Losers: Factors of production specific to the contracting industries (scarce factors) will face
decreased demand and lower returns. For example, workers in labor-intensive industries
may face wage pressures or potential unemployment due to increased competition from
imports.
6. Income Redistribution: The model implies that trade can lead to income redistribution within
an economy. The winners (owners of specific factors in expanding industries) gain more than
the losers (owners of specific factors in contracting industries), resulting in a distributional
effect.
It's important to note that the Specific Factors Model provides insights into the distributional effects
of trade in the short run. In the long run, factors of production may become more mobile, and
adjustments in the economy can occur, potentially mitigating some of the distributional impacts.