<p>I'm having trouble with the Rybczynski theorem. Let's say there's a migration to the domestic economy, increasing the Labor endowment. It states that the production of the good that uses labor more intensely will increase and the other one will decrease (which makes a lot of sense). However, it also states that the relative prices (both for goods and factor remuneration) will keep constant.</p>

<p>This doesn't make sense for me because when I solve for the equilibrium, the relative prices <em>do</em> depends on the relative scarceness of production factor. If I change this, it should go to a whole new equilibrium, shouldn't it?</p>

CC BY-SA 3.0
2016-03-29T03:32:45.343Z
Could you link to your version of the Theorem? After googling it I only found versions that make claims about the output, not about the prices.
Giskard
CC BY-SA 3.0
2016-03-30T12:51:12.147Z
Just found the answer! The hypothesis underlying it is that the relative prices are taken as given because we are dealing with a small open economy that can't influence the international relative prices.
Raul Guarini Riva
CC BY-SA 3.0
2017-06-14T07:31:36.950Z
I'm voting to close this question as off-topic because this is too specific, unlike to help anyone else.
luchonacho
CC BY-SA 3.0
2017-06-15T17:54:16.330Z
@luchonacho This is a request to clarify fundamental theoretical economic results. Nothing should be considered as too specific when we discuss theory.
Alecos Papadopoulos
<microeconomics><international-trade><international-economics>
Why shouldn't the relative prices change in the Heckscher-Ohlin model?
Raul Guarini Riva
# Why shouldn't the relative prices change in the Heckscher-Ohlin model?

(Asked by: username_0 on 2016-03-28)

I'm having trouble with the Rybczynski theorem. Let's say there's a migration to the domestic economy, increasing the Labor endowment. It states that the production of the good that uses labor more intensely will increase and the other one will decrease (which makes a lot of sense). However, it also states that the relative prices (both for goods and factor remuneration) will keep constant.

This doesn't make sense for me because when I solve for the equilibrium, the relative prices *do* depends on the relative scarceness of production factor. If I change this, it should go to a whole new equilibrium, shouldn't it?

**Tags:** microeconomics, international-trade, international-economics
> **Comments:**
> **username_1**: Could you link to your version of the Theorem? After googling it I only found versions that make claims about the output, not about the prices.  
> **username_0**: Just found the answer! The hypothesis underlying it is that the relative prices are taken as given because we are dealing with a small open economy that can't influence the international relative prices.  
> **username_2**: I'm voting to close this question as off-topic because this is too specific, unlike to help anyone else.  
> **username_3**: @luchonacho This is a request to clarify fundamental theoretical economic results. Nothing should be considered as too specific when we discuss theory.  

---

## 0 answers

