EconPapers    
Economics at your fingertips  
 

The Heckscher—Ohlin—Samuelson Trade Theory and the Cambridge Capital Controversies: On the Validity of Factor Price Equalisation Theorem

Kazuhiro Kurose () and Naoki Yoshihara ()
Additional contact information
Kazuhiro Kurose: Tohoku University

No SDES-2018-17, Working Papers from Kochi University of Technology, School of Economics and Management

Abstract: This paper examines the validity of the factor price equalisation theorem (FPET) in relation to capital theory. First, it presents a survey of the literature on Heckscher—Ohlin—Samuelson (HOS) models that treat capital as a primary factor, beginning with Samuelson (1953). In addition, by consulting the Cambridge capital controversies, this paper observes that the validity of the FPET relies crucially on this setting. It does no longer hold whenever capital is assumed to be a bundle of reproducible commodities. This paper also refers to the recent literature on the dynamic HOS trade theory and argues that such studies ignore the difficulties posed by the capital controversies. It thereby concludes that the FPET holds even when capital is modelled as a reproducible factor. In conclusion, the paper suggests the necessity of reconstructing basic theories of international trade without relying on the FPET.

Keywords: factor price equalisation; global univalence; capital as a bundle of reproducible commodities; reswitching of techniques; capital reversing (search for similar items in EconPapers)
JEL-codes: B51 D33 F11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe
Date: 2018-11, Revised 2018-11
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published in SDE Series, November 2018, pages 1-56

Downloads: (external link)
http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2018-17.pdf First version, 2018 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kch:wpaper:sdes-2018-17

Access Statistics for this paper

More papers in Working Papers from Kochi University of Technology, School of Economics and Management Contact information at EDIRC.
Bibliographic data for series maintained by Sachiko Minami ().

 
Page updated 2019-10-12
Handle: RePEc:kch:wpaper:sdes-2018-17