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How Likely Is Factor Price Equalization?

Publikation: Working paperForskning

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The idea of treating factor price equalization as a situation, where the distribution of factors among countries is compatible with an equilibrium in an integrated world economy, has been refined to give the so-called lens condition for factor price equalization. In this paper, we show that the lens condition may be used to give estimates for the probability of factor price equalization when factors are distributed randomly among countries and, in addition, the techologies are sampled according to a given probability distribution. The estimates indicate that factor price equalization may occur less often than intuitively conceived
OriginalsprogEngelsk
UdgiverDepartment of Economics, University of Copenhagen
Antal sider13
StatusUdgivet - 2008

Bibliografisk note

JEL classification: F11

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