<P> The Ricardian trade theory was now constructed on many - country many - product basis in a form to include intermediate input trade for the most general case of many countries and many goods . Capital goods (comprising fixed capital) are treated as goods which is produced and input in the production . </P> <P> There were three waves of expansions and generalizations . </P> <P> First phase: Major general results were obtained by McKenzie and Jones . McKenzie was more interested in the patterns of trade specialisiations (including incomplete specializations), whereas Jones was more interested in the patterns of complete specialization, in which the prices moves freely within a certain limited range . The formula he found is often cited as Jones inequality or Jones' criterion . </P> <P> Second phase: Ricardo's idea was even expanded to the case of continuum of goods by Dornbusch, Fischer, and Samuelson This model is restricted to two country case . It is employed for example by Matsuyama and others . These theories use a special property that is applicable only for the two - country case . They normally assume fixed expenditure coefficients . </P>

The theory of international trade that focus on endowment of production factors is introduced by