Factor Price Equalisation Theory (With Obstacles) | International Economics
The factor price equalisation theory is an important corollary of the H-O theory of trade. If there is a free international movement of factors, the prices of the factors of production undisputably get equalised. However, the classical theorists as well as Heckscher and Ohlin had assumed an international immobility of factors. This led to the crucial question of how the [...]