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α: calibrated so average coauthorship-adjusted count equals average raw count
In the presence of output or price uncertainty, the Heckscher‐Ohlin‐Samuelson (H‐O‐S) model with incomplete risk markets has been shown to exhibit a wide range of perverse comparative‐statics responses which contradict the predictions à la Stolper‐Samuelson and Rybczynski, and opens up the possibility of perverse price‐output responses. This paper revisits the question raised by Neary (1978) and examines the dynamic stability properties of an H‐O‐S model under uncertainty in relation to the conditions under which these perverse responses emerge. The findings suggest that, once the risk attitudes of the representative entrepreneur is appropriately accounted for in the specification of value factor intensities, dynamic stability with respect to a Marshallian adjustment process is necessary and sufficient for the normality of all of the standard comparative‐statics responses except for the Rybczynski result. The basic analytics are then applied to various existing setups of the H‐O‐S model under uncertainty. In each case, the applicability of the stability condition in precluding comparative‐static responses that violate standard predictions is examined.