Relative prices and real factor rewards: A reinterpretation |
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Authors: | Ronald W Jones |
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Institution: | University of Rochester, Rochester, NY 14627, USA |
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Abstract: | Two devices are generally available to increase the reward of a productive factor: (i) a direct subsidy to the factor, and (ii) an alteration in relative commodity prices. The Stolper-Samuelson result, whereby method (ii) suffices to improve the real reward of a productive factor in a 2×2 setting with no joint production is shown to be valid in the n-commodity, n-factor model. |
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