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Rybczynski Theorem

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Definition: The Rybczynski theorem is roughly as follows: In the context of a Heckscher-Ohlin model of international trade, open trade between regions means changes in relative factor supplies between regions can lead to an adjustment in quantities and types of outputs between regions that would return the system toward equality of production input prices like wages across countries (the state of factor price equalization).

Such theorems are named this way by analogy to Rybczynski (1955), and refer to that part of the mechanism that has to do with output adjustments.

(Econterms)

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