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A Note on the Empirical Implementation of the Lens Condition

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Author Info
Andrew B. Bernard
Raymond Robertson
Peter K. Schott

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Abstract

Deardorff [Journal of International Economics 36 (1994) 167-175] offers an intuitively appealing test for factor price equality (FPE). He demonstrates that FPE is impossible if the set (i.e., lens) of points defined by regional factor abundance vectors does not lie within the set of points defined by goods' input intensities. This note demonstrates that empirical implementation of the lens condition is problematic if the "true" number of either goods or regions is unknown. We show that satisfaction of the lens condition is more likely when goods are relatively disaggregate compared to regions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11448.

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Date of creation: Jul 2005
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Handle: RePEc:nbr:nberwo:11448

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F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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  1. Siu-kee Wong & Kwan Koo Yun, 2003. "The Lens Condition with Two Factors," Review of International Economics, Blackwell Publishing, vol. 11(4), pages 692-696, 09. [Downloadable!] (restricted)
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  2. Demiroglu, Ufuk & Koo Yun, Kwan, 1999. "The lens condition for factor price equalization," Journal of International Economics, Elsevier, vol. 47(2), pages 449-456, April. [Downloadable!] (restricted)
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  3. Peter K. Schott, 2003. "One Size Fits All? Heckscher-Ohlin Specialization in Global Production," American Economic Review, American Economic Association, vol. 93(3), pages 686-708, June. [Downloadable!]
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  4. Debaere, Peter & Demiroglu, Ufuk, 2003. "On the similarity of country endowments," Journal of International Economics, Elsevier, vol. 59(1), pages 101-136, January. [Downloadable!] (restricted)
  5. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May. [Downloadable!] (restricted)
  6. Debaere, Peter, 2004. "Does lumpiness matter in an open economy?: Studying international economics with regional data," Journal of International Economics, Elsevier, vol. 64(2), pages 485-501, December. [Downloadable!] (restricted)
  7. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December. [Downloadable!] (restricted)
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  8. Robertson, Raymond, 2004. "Relative prices and wage inequality: evidence from Mexico," Journal of International Economics, Elsevier, vol. 64(2), pages 387-409, December. [Downloadable!] (restricted)
  9. Ling Qi, 2003. "Conditions for Factor Price Equalization in the Integrated World Economy Model," Review of International Economics, Blackwell Publishing, vol. 11(5), pages 899-908, November. [Downloadable!] (restricted)
  10. 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. [Downloadable!] (restricted)
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  11. Kwan Koo Yun, 2003. "Similarity of endowments and the factor price equalization condition," Economic Theory, Springer, vol. 21(2), pages 605-612, 03. [Downloadable!] (restricted)
  12. Deardorff, Alan V., 1994. "The possibility of factor price equalization, revisited," Journal of International Economics, Elsevier, vol. 36(1-2), pages 167-175, February. [Downloadable!] (restricted)
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