The Stolper-Samuelson theorem, derived by Wolfgang Stolper and Paul Samuelson in 1941 within the Heckscher-Ohlin model of international trade, describes how the relative prices of traded goods relate to the real returns paid to the factors used to produce them. Under the model's assumptions of constant returns to scale, perfect competition and each factor going into only one type of production, a rise in the relative price of a good raises the real return to whichever factor is used most intensively in producing that good, and lowers the real return to the other factor. The theorem is a foundational result in trade theory, used to explain how opening a country to trade shifts income between labor and capital depending on which factor its export goods use intensively.
Facts
StatementA rise in the relative price of a good raises the real return to the factor used most intensively in producing that good, and lowers the real return to the other factor. 1 Classification
Statement FormCharacterization Theorem 1 Connections
Sources
1. Stolper-Samuelson theorem, Wikipedia
Statement of the theorem
A rise in the relative price of a good will lead to a rise in the real return to that factor which is used most intensively in the production of the good, and conversely, to a fall in the real return to the other factor.
Introduction, derivation
It was derived in 1941 from within the framework of the Heckscher
In Group: International Trade Theory, Lead paragraph
The Stolper-Samuelson theorem is a theorem in Heckscher-Ohlin trade theory.
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