ABSTRACT
The reduced costs of economic distance and the integration of the newly industrializing countries as well as of the new market economies have changed the equilibrium of the world product markets. The world product markets are in equilibrium if there is no excess demand. The prices on the markets must adjust in such a way that this condition is satisfied. The world market is characterized by the law of one price. If no trade barriers exist and if transport costs equal zero, that is if markets are not segmented, the same price must be observed everywhere for a homogeneous good. The world transformation curve results from the transformation curves of each individual country. World market equilibrium will be disturbed, if the supply of a production factor changes. Factor abundance may also change gradually; for example, if the pollution of the environment is increasingly taken into account.
