Property rights, mobile capital, and comparative advantage

Recent papers show that imperfect property rights to a natural resource - a sector-specific factor-can be a source of comparative advantage. In these models, weaker property rights attract labor-the only mobile factor - to the resource sector, increasing 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 endogenous, a deterioration of property rights has ambiguous effects on comparative advantage and on the equilibrium wage/rental ratio.