Factor price equalization in a Ricardian framework

Cláudio Gontijo

Textos para Discussão Cedeplar-UFMG from Cedeplar, Universidade Federal de Minas Gerais

Abstract: One important piece of the modern neo-classical theory of international trade is the celebrated Factor Price Equalization Theorem, developed independently by Lerner (1952, though written in 1932) and Samuelson (1948, 1949, 1953). This Theorem states that under certain conditions free trade leads to complete equalization of production factor rewards independently of factor mobility. A similar result - a tendency towards equalization of the profit rate - was obtained by Mainwaring (1978) in a Ricardian-Sraffian framework, but under the assumption that all trading countries share the same technology. The objective of this article is to discuss this result assuming technological differences among trading countries.

Keywords: factor price equalization; Ricardian economics (search for similar items in EconPapers)
Pages: 14 pages
Date: 2000
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