The Sufficiency of the "Lens Conditions" for Factor Price Equalization in the Case of Two Factors
AbstractFactor price equalization (FPE) is a central theme in trade theory, for which Dixit and Norman (1980) establish the necessary and sufficient condition (the FPE condition). Deardorff (1994) provides a more intuitive condition (the lens condition) and establishes its necessity in general, as well as its sufficiency for the case of 2 countries. In this paper, I prove that the lens condition is sufficient for FPE in the case of 2 factors. This theorem has implications for empirical work.
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Bibliographic InfoPaper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 434.
Length: 16 pages
Date of creation: 1999
Date of revision:
TRADE POLICY ; PRICES;
Other versions of this item:
- 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.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F10 - International Economics - - Trade - - - General
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