Necessary and sufficient conditions for factor price equalization
AbstractAlthough models with factor price equalization are used frequently in both theoretical and applied research in international economics, only sufficient conditions for factor price equalization have been presented in the literature. In this paper, the authors present necessary and sufficient conditions for factor price equalization under quite general assumptions about the technologies of different countries. The necessary and sufficient conditions they derive are consistent with joint production, decreasing returns to scale, and substantive differences in the technologies and endowments of different countries. The authors' results enable them to reconcile the classical approach and the integrated equilibrium approach to factor price equalization. Copyright 1993 by The Review of Economic Studies Limited.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1986047.
Date of creation: 01 Jan 1986
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- Blackorby, Charles & Schworm, William & Venables, Anthony, 1993. "Necessary and Sufficient Conditions for Factor Price Equalization," Review of Economic Studies, Wiley Blackwell, vol. 60(2), pages 413-34, April.
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- Xiang, Chong, 2001. "The sufficiency of the 'lens condition' for factor price equalization in the case of two factors," Journal of International Economics, Elsevier, vol. 53(2), pages 463-474, April.
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