Deardorff (1994) provides a condition that is necessary for factor price equalization across countries. That condition is a generalization of "country endowments contained in the diversification cone" from the standard 2x2x2 Hecksher-Ohlin model to the case of many goods, countries and factors. He also shows that this condition is sufficient in the case of two countries, and conjectures that sufficiency might hold in general. In this paper we establish sufficiency in some further cases. However, we show by a counterexample that the sufficiency does not hold in general.
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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number
404.
Find related papers by JEL classification: F11 - International Economics - - Trade - - - Neoclassical Models of Trade F10 - International Economics - - Trade - - - General
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