0

values of $X_{1}$ and $X_{2}$ in both countries once the appropriate substitutions are made. Setting $e=\phi e_{0}$ and $b=\phi b_{0}$ in both equations yields:
$$X_{1}(\phi)=\frac{\frac{r}{\phi}+b_{0}+e_{0}}{2 e_{0} P} \quad X_{2}(\phi)=\frac{e_{0}}{b_{0}+e_{0}}\left[L-{X,(\phi)}^{2}\right]$$
Thus, $X_{1}$ is decreasing in $\phi$ and $X_{2}$ is increasing in $\phi$. It follows that the country with higher turnover has a relative supply curve which is further to the right than its counterpart’s. As a result, the autarkic price of the search-sector good is lower in the country with the higher turnover.

## ECON3016 COURSE NOTES ：

$$\left(\hat{x}{1}-\hat{x}{2}\right)={1 /|\lambda|}(\hat{L}-\hat{K})$$
An increase in the relative endowment of labor compared with capital raises by a magnified amount the relative output of the first commodity. In more detail, if the endowment of labor increases relative to that of capital, with commodity prices constant,
$$\hat{x}{1}>\hat{L}>\hat{K}>\hat{x}{2}$$
The Rybczynski result refers to the fall in $x_{2}$ ‘s output if $\hat{K}$ is assumed to be zero.