The standard two-sector model is generalized to include a slowly adjusting technique of production. The relationship between a short run fixed coefficients production structure and a long run production structure in which factors are substitutable is examined. The Stolper-Samuelson theorem holds both on impact and in the long run. However, adjustment from the impact equilibrium to the long run equilibrium could cause both factor prices to increase, or one to rise while the other falls. Which result occurs depends upon the relative long run substitutability of factors in the two sectors. The path of adjustment taken by factor prices following an exogenous shock is analyzed. It is shown that factor price movements depend upon the costs of adjustment and that a variety of adjustment paths are possible. Copyright 1990 by Royal Economic Society.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 42 (1990) Issue (Month): 2 (April) Pages: 429-45 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Handle: RePEc:oup:oxecpp:v:42:y:1990:i:2:p:429-45
Contact details of provider: Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK Fax: 01865 267 985 Email: Web page: http://oep.oupjournals.org/