The_Heckscher-Ohlin_Model__Lesson_22_

The_Heckscher-Ohlin_Model__Lesson_22_ - Proof of...

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1 Lesson 22 1 Proof of Stolper-Samuelson theorem In this lesson, we “prove” the Stolper- Samuelson theorem The “proof” is by way of example, and is therefore not completely general Generalization requires more advanced mathematical techniques Lesson 22 2 This lesson starts where the proof of the factor-price-equalization theorem ends Lesson 22 3 That earlier lesson ended with the following graph: w r YL Y Pa YK Y Pa X LX Pa X KX Pa w r
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2 Lesson 22 4 Each of the two negatively-sloped curves represents combinations of w and r consistent with zero profit w r YL Y Pa YK Y Pa X LX Pa X KX Pa w r Lesson 22 5 The steeper of the two curves applies to sector X , the other to sector Y w r YL Y Pa YK Y Pa X LX Pa X KX Pa w r Slope = KX LX a a Slope = KY LY a a Lesson 22 6 This means that sector X is capital intensive relative to sector Y w r YL Y Pa YK Y Pa X LX Pa X KX Pa w r Slope = KX LX a a Slope = KY LY a a
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3 Lesson 22 7 This is only an example, and we could have
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This note was uploaded on 09/14/2009 for the course ECON 340 taught by Professor Leidholm during the Summer '08 term at Michigan State University.

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The_Heckscher-Ohlin_Model__Lesson_22_ - Proof of...

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