IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-349-26255-7_25.html
   My bibliography  Save this book chapter

Variable Returns to Scale and Factor Price Equalization

In: Increasing Returns and Economic Analysis

Author

Listed:
  • Murray C. Kemp
  • Masayuki Okawa
  • Makoto Tawada

Abstract

In their classical expositions of the Factor Price Equalization (FPE) Theorem, Heckscher (1919), Lerner (1952), Samuelson (1948, 1949) and McKenzie (1955) provided sufficient conditions for the equality of equilibrium factor rewards in two or more countries. Those conditions invariably included the specification of perfectly competitive markets supported by convex production sets and freedom of entry. The focus on convexity continues in modern textbook presentations of the theory, suggesting a widespread belief that FPE is ‘less likely’ in a context of non-convexities. In contrast, we shall argue that if the non-convexities flow from external economies associated with changes in world-wide industry outputs then the existing theory of FPE is already sufficiently general to accommodate the non-convexities. In particular, it will be shown that, leaving aside singular cases in which the input vectors of industries are linearly dependent, the set of international factor assignments compatible with FPE is of full rank if and only if there are at least as many tradeable commodities as primary factors.

Suggested Citation

  • Murray C. Kemp & Masayuki Okawa & Makoto Tawada, 1998. "Variable Returns to Scale and Factor Price Equalization," Palgrave Macmillan Books, in: Kenneth J. Arrow & Yew-Kwang Ng & Xiaokai Yang (ed.), Increasing Returns and Economic Analysis, chapter 19, pages 409-412, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-26255-7_25
    DOI: 10.1007/978-1-349-26255-7_25
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-349-26255-7_25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.