Similarity of endowments and the factor price equalization condition |
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Authors: | Kwan Koo Yun |
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Institution: | (1) Economics Deptartment, SUNY at Albany, Albany, NY 12222, USA (e-mail: yun@albany.edu) , US |
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Abstract: | Summary. 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.
Received: January 2, 2002; revised version: July 1, 2002
RID="*"
ID="*" The author would like to thank an anonymous referee, Bruce Dieffenbach and Michael Jerison for helpful comments. |
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Keywords: | and Phrases: Factor price equalization Lens condition Similarity of endowments |
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