Abstract
Recent papers use sector-specific factor models with mobile labor to show that imperfect property rights can be a source of comparative advantage. In these models, weaker property rights to the specific factor in a sector attract the mobile factor and increase the country's comparative advantage for that sector. If capital in addition to labor is mobile, and if the benefits of capital are non-excludable or if the degree of property rights is endogencous, a deterioration of property rights has ambiguous effects on comparative advantage. The presence of a second mobile factor also makes the relation between the equilibrium wage-rental ratio and the degree of property rights ambiguous.
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