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Factor Price Equalization Theorem
(20th century)
Formulated by American economist Paul Samuelson (1915- ) on the basis of the Heckscher-Ohlin Trade Theory, factor price equalization theorem postulates that free trade in commodities will eliminate price differentials, thereby effecting an equalization of factor prices; especially wages and interest rates.
Also see: comparative costs, absolute advantage theory, customs union theory, rybczynski theorem
Source:
A P Lerner, 'Factor Prices and International Trade', Econometrica, XIX (1952), 1-15
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