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The Sufficiency of the "Lens Conditions" for Factor Price Equalization in the Case of Two Factors

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Author Info
Xiang, C.

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Abstract

Factor 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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Publisher Info
Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 434.

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Length: 16 pages
Date of creation: 1999
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Handle: RePEc:mie:wpaper:434

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Related research
Keywords: TRADE POLICY PRICES

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Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F10 - International Economics - - Trade - - - General

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jiandong Ju & Shang-Jin Wei, 2006. "A Solution to Two Paradoxes of International Capital Flows," NBER Working Papers 12668, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Daniel Becker & Erich Gundlach, 2006. "Notes on Factor Price Equality and Biased Technical Change in a Two-Cone Trade Model," Thuenen-Series of Applied Economic Theory 68, University of Rostock, Institute of Economics, Germany. [Downloadable!]
    Other versions:
  3. Andrew B. Bernard & Raymond Robertson & Peter K. Schott, 2005. "A Note on the Empirical Implementation of the Lens Condition," NBER Working Papers 11448, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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