ABSTRACT
The reduced costs of economic distance and the integration of the newly industrializing countries as well as of the new market economies have changed the equilibrium of the world commodity markets. The supply of commodities has increased and at the same time new markets have arisen. In order to examine these effects, we first look at the world market equilibrium on the commodity markets (section 2.1). Then the effects of the reduction of trade barriers and the rising labor supply will be discussed (sections 2.2 and 2.3). The impact of a labor supply increase on factor income and on employment is a major point (section 2.4). The most important theorems on the international division of labor will be briefly summarized (section 2.5). Shifts of demand and a changed demarcation line between tradable and non-tradable goods also play their role (sections 2.6 and 2.7). Some world, markets are characterized by imperfect competition (section 2.8); imperfect competition is associated with intra-sectoral trade (section 2.9). The question is raised whether markets are contestable when economies of scale exist and different preferences have to be taken into account (section 2.10). Finally, markets and vertical hierarchy are discussed as different approaches to the international division of labor (sections 2.11 and 2.12).
