ABSTRACT
In their classical expositions of the Factor Price Equalization (FPE) theorem, Heckscher (1919), Lerner (1952), Samuelson (1948, 1949) and McKenzie (1955) provided sufficient conditions for the equality of equilibrium factor rewards in two or more countries. Those conditions invariably included the specification of perfectly competitive markets supported by convex production sets and freedom of entry. The focus on perfect competition continues in modern textbook presentations of the theory.2 Moreover, Blackorby et al. (1993) have recently proposed a set of conditions that, they claim, are necessary and sufficient for FPE, implicitly including in the set the requirement that all markets be competitive.
