How Likely is Factor Price Equalization?

How Likely Is Factor Price Equalization?

The idea of treating factor price equalization as a situation, where the distribution of factors among countries is compatible with an equilibrium in an integrated world economy, has been refined to give the so-called lens condition for factor price equalization. In this paper, we show that the lens condition may be used to give estimates for the probability of factor price equalization when fa...

Food Taxes: How Likely Are Likely Effects?

Factor Price Equalization (FPE) Implies Product Quality Equalization (PQE)

This paper examines the issue of the effect of international trade on quality choice by firms in a factor-endowment framework. Factor price equalization implies product quality equalization. In the NorthSouth context it means that the South catches up with the North in product quality due to the competitive pressure from international trade, not because of technology adoption. Free trade may in...

Factor Price Equalization? the Cointegration Approach Revisited

Factor price equality across countries is an important implication of the Heckscher-Ohlin-Samuelson model of international trade. Although an influential theoretical result, the model has received surprisingly little empirical support. Burgman and Geppert (1993) argue that this might be due to the neglect of the nonstationarity property of the time series under consideration. Using a cointegrat...

How Likely is Simpson’s Paradox?

What proportion of all 2× 2× 2 contingency tables exhibit Simpson’s Paradox? An approximate answer is obtained for large sample sizes and extended to 2×2×l tables. Several conditional probabilities of the occurrence of Simpson’s Paradox are also derived. Given that the observed cell frequencies satisfy a Simpson reversal, the posterior probability that the population parameters satisfy the same...