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Factor price equalization in a Ricardian framework

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  • Cláudio Gontijo

Abstract

One important piece of the modern neo-classical theory of international trade is the celebrated Factor Price Equalization Theorem, developed independently by Lerner (1952, though written in 1932) and Samuelson (1948, 1949, 1953). This Theorem states that under certain conditions free trade leads to complete equalization of production factor rewards independently of factor mobility. A similar result - a tendency towards equalization of the profit rate - was obtained by Mainwaring (1978) in a Ricardian-Sraffian framework, but under the assumption that all trading countries share the same technology. The objective of this article is to discuss this result assuming technological differences among trading countries.

Suggested Citation

  • Cláudio Gontijo, 2000. "Factor price equalization in a Ricardian framework," Textos para Discussão Cedeplar-UFMG td149, Cedeplar, Universidade Federal de Minas Gerais.
    • Handle: RePEc:cdp:texdis:td149
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    File URL: https://www.cedeplar.ufmg.br/pesquisas/td/TD%20149.pdf
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    References listed on IDEAS

    as
    1. Paul A. Samuelson, 1953. "Prices of Factors and Goods in General Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 1-20.
    2. Samuelson, Paul A., 1975. "Trade pattern reversals in time-phased Ricardian systems and intertemporal efficiency," Journal of International Economics, Elsevier, vol. 5(4), pages 309-363, November.
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