Production possibilities and trade in a one-primary factor economy with public infrastructure

In this paper, we consider a Ricardian type of economy with public infrastructure, which is of “creation of atmosphere” type or “unpaid factor” type. We show that, although the production possibility frontier is convex in the creation of atmosphere type of infrastructure but is concave in the unpaid factor type, the optimal supply of public infrastructure increases according to an increase in the good that is more heavily dependent on the infrastructure along the production possibility frontier for both types. Subsequently, we showed that a country with larger labor endowment likely exports the good more heavily dependent on public infrastructure in the creation of atmosphere case, while that country likely exports the other good in the unpaid factor case.