Econometrica: Jul, 1959, Volume 27, Issue 3

Prices of the Factors of Production in International Trade

https://doi.org/0012-9682(195907)27:3<448:POTFOP>2.0.CO;2-G
p. 448-468

Hirofumi Uzawa

The problem of international factor-price equalization is studied by using a technique which combines the Walrasian theory of general equilibrium with the theory of welfare economics. The principle of the complete or partial equalization was first enunciated by Eli Heckscher in his 1919 paper and was later elaborated by Bertil Ohlin, Paul A. Samuelson, and others. The present study shows in particular that the complete factor-price equalization occurs only in the cases in which the factor endowments in the countries are precisely the ones that arise in an equilibrium position of world trade where the factors of production as well as the commodities can move internationally.