ABSTRACT
The theory of comparative costs is often assumed to be capable in principle at least and with proper empirical implementation of explaining the network of interregional trade flows. In connection it might be worthwhile to remember that the explanatory power of comparative cost theory turns out to be even more restricted in the actually hardly ever existing, but theoretically much discussed, case of international factor price equalization. The well-known Samuelson-Stolper theorem states that under certain conditions the free, unimpeded international exchange would equalize not only the price of goods and services actually sold and purchased across national borders, but also of the so-called primary factors of production such as labor, capital, and natural resources. The theorists who formulate and reformulate the theory of comparative costs are certainly aware of what it can and what it cannot be expected to explain.
