Specific Factor and Optimal Intervention to Achieve Non‐Economic Objectives

In this article the author explores the optimal policies to achieve non‐economic objectives in the presence of a specific factor and demonstrates that the same policies—though not necessarily at the same level—are required as in the traditional two‐by‐two trade model. In addition, it is shown that a direct subsidy on the specific factor will be the optimal policy for the exploitation of domestic‐owned resources.