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The sufficiency of the 'lens condition' for factor price equalization in the case of two factors

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  • Xiang, Chong

Abstract

Factor price equalization (FPE) is a central theme in trade theory, for which Dixit and Norman (1980) establish the necessary and sufficient condition (the FPE condition). Deardorff (1994) provides a more intuitive condition (the lens condition) and establishes its necessity in general, as well as its sufficiency for the case of 2 countries. In this paper, I prove that the lens condition is sufficient for FPE in the case of 2 factors. This theorem has implications for empirical work.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 53 (2001)
Issue (Month): 2 (April)
Pages: 463-474

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Handle: RePEc:eee:inecon:v:53:y:2001:i:2:p:463-474

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Web page: http://www.elsevier.com/locate/inca/505552

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  1. Deardorff, A.V., 1991. "The Possibility of Factor Price Equalization, Revisited," Working Papers 277, Research Seminar in International Economics, University of Michigan.
  2. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
  3. Demiroglu, Ufuk & Koo Yun, Kwan, 1999. "The lens condition for factor price equalization," Journal of International Economics, Elsevier, vol. 47(2), pages 449-456, April.
  4. Debaere, Peter & Demiroglu, Ufuk, 2003. "On the similarity of country endowments," Journal of International Economics, Elsevier, vol. 59(1), pages 101-136, January.
  5. BLACKORBY, Ch. & SCHWORM, W. & VENABLES, A., 1986. "Necessary and sufficient conditions for factor price equalization," CORE Discussion Papers 1986047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. Andrew B. Bernard & Raymond Robertson & Peter K. Schott, 2005. "A Note on the Empirical Implementation of the Lens Condition," NBER Working Papers 11448, National Bureau of Economic Research, Inc.
  2. Jiandong Ju & Shang-Jin Wei, 2006. "A Solution to Two Paradoxes of International Capital Flows," NBER Working Papers 12668, National Bureau of Economic Research, Inc.
  3. Daniel Becker & Erich Gundlach, 2006. "Notes on Factor Price Equality and Biased Technical Change in a Two-Cone Trade Model," Kiel Working Papers 1300, Kiel Institute for the World Economy.
  4. Kwan Koo Yun & Siu-kee Wong, 2001. "The Lens Condition with Two Factors," Discussion Papers 01-08, University at Albany, SUNY, Department of Economics.
  5. Brakman, Steven & van Marrewijk, Charles, 2013. "Lumpy countries, urbanization, and trade," Journal of International Economics, Elsevier, vol. 89(1), pages 252-261.

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