The Sufficiency of the "Lens Conditions" for Factor Price Equalization in the Case of Two Factors
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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- Charles Blackorby & William Schworm & Anthony Venables, 1993.
"Necessary and Sufficient Conditions for Factor Price Equalization,"
Review of Economic Studies,
Oxford University Press, vol. 60(2), pages 413-434.
- BLACKORBY, Ch. & SCHWORM, W. & VENABLES, A., 1986. "Necessary and sufficient conditions for factor price equalization," CORE Discussion Papers 1986047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Debaere, Peter & Demiroglu, Ufuk, 2003. "On the similarity of country endowments," Journal of International Economics, Elsevier, vol. 59(1), pages 101-136, January.
- Deardorff, A.V., 1991.
"The Possibility of Factor Price Equalization, Revisited,"
277, Research Seminar in International Economics, University of Michigan.
- Deardorff, Alan V., 1994. "The possibility of factor price equalization, revisited," Journal of International Economics, Elsevier, vol. 36(1-2), pages 167-175, February.
- Demiroglu, U. & Yun, K.K., 1997.
"The Lens Conditions for factor Price Equalization,"
404, Research Seminar in International Economics, University of Michigan.
- Donald R. Davis & David E. Weinstein, 1998.
"An Account of Global Factor Trade,"
Harvard Institute of Economic Research Working Papers
1849, Harvard - Institute of Economic Research.
- Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," NBER Working Papers 6785, National Bureau of Economic Research, Inc.
- Davis, D.R. & Weinstein, D.E., 1999. "An Account of Global Factor Trade," Working Papers 435, Research Seminar in International Economics, University of Michigan.
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