What is Factor Price Equalization

Factor price equalization is an economic theory, by Paul A. Samuelson (1948), which states that the prices of identical factors of production, such as the wage rate or the rent of capital, will be equalized across countries as a result of international trade in commodities. The theorem assumes that there are two goods and two factors of production, for example capital and labour. Other key assumptions of the theorem are that each country faces the same commodity prices, because of free trade in commodities, uses the same technology for production, and produces both goods. Crucially these assumptions result in factor prices being equalized across countries without the need for factor mobility, such as migration of labor or capital flows.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Factor price equalization

Chapter 2: David Ricardo

Chapter 3: Comparative advantage

Chapter 4: Federal Reserve

Chapter 5: Transformation problem

Chapter 6: Cost-of-production theory of value

Chapter 7: Production-possibility frontier

Chapter 8: Stolper-Samuelson theorem

Chapter 9: Balassa-Samuelson effect

Chapter 10: Rybczynski theorem

Chapter 11: Heckscher-Ohlin model

Chapter 12: International economics

Chapter 13: Heckscher-Ohlin theorem

Chapter 14: Lange model

Chapter 15: International factor movements

Chapter 16: Luigi Pasinetti

Chapter 17: Factor market

Chapter 18: International trade theory

Chapter 19: Cambridge capital controversy

Chapter 20: Exploitation of labour

Chapter 21: Financial instrument

(II) Answering the public top questions about factor price equalization.

(III) Real world examples for the usage of factor price equalization in many fields.

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Factor Price Equalization.