Similarity of endowments and the factor price equalization condition

Kwan Koo Yun ()

Economic Theory, 2003, vol. 21, issue 2, 605-612

Abstract: We give a geometric interpretation of the lens condition, proposed by Deardorff as a shortcut for checking the factor price equalization (FPE) condition. We identify the conditions under which the lens condition implies the FPE condition. If the FPE zone is not a neighborhood of the diagonal allocations, however, the lens condition is irrelevant despite the implication since the FPE condition (hence the lens condition) is unlikely to be satisfied in that case. We give precise conditions under which the lens condition is equivalent to the FPE condition and simultaneously, the FPE zone is a neighborhood of the diagonal allocations. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Keywords and Phrases: Factor price equalization; Lens condition; Similarity of endowments.; JEL Classification Numbers: F11. (search for similar items in EconPapers)
Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00199-002-0315-6

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