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

Author

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  • Xiang, C.

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.

Suggested Citation

  • Xiang, C., 1999. "The Sufficiency of the "Lens Conditions" for Factor Price Equalization in the Case of Two Factors," Working Papers 434, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:434
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    Cited by:

    1. Giovanni Facchini, 2004. "The political economy of international trade and factor mobility," Journal of Economic Surveys, Wiley Blackwell, vol. 18(1), pages 1-32, February.
    2. Artal, Andrés & Castillo, Juana & Requena,Francisco, 2007. "La distribución factorial en las regiones y la igualación del precio de los factores: Aplicación de la “condición de lentes” en España/Regional Factor Distribution and Factor Price Equalisation: an Ap," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 25, pages 727-742, Diciembre.
    3. Becker, Daniel Thomas & Gundlach, Erich, 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.
    4. Brakman, Steven & van Marrewijk, Charles, 2013. "Lumpy countries, urbanization, and trade," Journal of International Economics, Elsevier, vol. 89(1), pages 252-261.
    5. Francisco Requena & Andrés Artal & Juana Castillo, 2008. "Testing Heckscher— Ohlin—Vanek Model Using Spanish Regional Data," International Regional Science Review, , vol. 31(2), pages 159-184, April.
    6. Jiandong Ju & Shang-Jin Wei, 2014. "A Solution to Two Paradoxes of International Capital Flows," Economic and Political Studies, Taylor & Francis Journals, vol. 2(1), pages 3-43, January.
    7. Kazuyuki Nakamura, 2015. "Computational investigation of the feasibility of factor price equalization," Letters in Spatial and Resource Sciences, Springer, vol. 8(2), pages 101-108, July.
    8. Andrew B. Bernard & Raymond Robertson & Peter K. Schott, 2010. "Is Mexico a Lumpy Country?," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 937-950, November.
    9. Kwan Koo Yun & Siu-kee Wong, 2001. "The Lens Condition with Two Factors," Discussion Papers 01-08, University at Albany, SUNY, Department of Economics.
    10. Debaere, Peter & Demiroglu, Ufuk, 2003. "On the similarity of country endowments," Journal of International Economics, Elsevier, vol. 59(1), pages 101-136, January.
    11. 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.

    More about this item

    Keywords

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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F10 - International Economics - - Trade - - - General

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