Uncertainty and the theory of international trade in long-run equilibrium (Q2266662)

We consider a country with two factors and two industries, each of which faces technical and price uncertainty. Entrepreneurs choose outputs in order to maximize the expected utility of profits. They also draw factor payments and purchase consumption goods after the uncertainty is resolved. They enter and exit from an industry according to whether participation there increases their expected utility. Within this model, the validity of the propositions of neoclassical trade theory depends on how the entrepreneurs' entry decisions are affected by parameter changes via their roles as risk bearers, consumers and factor owners.