A Classroom Experiment on the Specific Factors Model

This paper proposes a classroom-experiment approach to interrogate the specific factors model. Its design differs from earlier work in that students can observe both the factor prices in two different sectors, and the society’s welfare. Students participate as factor owners and can produce both of two kinds of goods by allocating their resources to maximise their teams’ welfare. Their resource endowment, relative prices, and trade rules vary round by round. Based on the outcomes, students discuss the impacts of relatively abundant resources, relative prices and trade rules on team welfare, individual income and the gains from trade. This classroom experiment could foster better learner understanding of the specific factors model, both individually and collectively.