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Tag Archives: Factor Price Equalization

A MODEL OF TWO-FACTOR ECONOMY & FACTOR PRICE EQUALIZATION

1.INTRODUCTION In order to understand factor price equalization theory, it is required to comprehend Heskscher-Ohlin theory. In this sense, first, Heskscher-Ohlin theory will be examined briefly. When there is only one factor of production which is labor, comparative advantage can occur by differences in labor productivity internationally (Ricardian Model). However, while trade can be partially […]