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

  • Xiang, C.

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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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
Date of revision:
Handle: RePEc:mie:wpaper:434
Contact details of provider: Postal: ANN ARBOR MICHIGAN 48109
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  1. 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.
  2. 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.
  3. Deardorff, Alan V., 1994. "The possibility of factor price equalization, revisited," Journal of International Economics, Elsevier, vol. 36(1-2), pages 167-175, February.
  4. 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.
  5. Debaere, Peter & Demiroglu, Ufuk, 2003. "On the similarity of country endowments," Journal of International Economics, Elsevier, vol. 59(1), pages 101-136, January.
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