<p>I am just wondering whether not achieving FPE is good for world trade. My reason being that is that international trade keeps expanding until complete FPE is achieved, according to the Heckscher-Ohlin model. This means more trading so global economic growth keeps increasing so having positive chain reaction effect on the world right? I am thinking in the real-world as clearly some of the assumptions of the HO model do not hold in the real-world.   </p>

<p>Edit: any links to good reading materials on this topic?  </p>

CC BY-SA 3.0
2016-11-06T22:13:30.153Z
"more trading" compared to what? Perhaps if we would achieve FPE tomorrow we would have 'maximum trade'.
Giskard
CC BY-SA 3.0
2016-11-07T12:26:06.330Z
i.e. countries keep exporting and importing.Otherwise, if FPE is achieved why would a country choose to import goods if the good is the same price in its own country relative to another country?
Linsky
CC BY-SA 3.0
2016-11-07T14:44:00.700Z
Doesn't complete factor price equalization imply marginal product equalization as well? If it does than this implies a maximization of global output in the same way that allocating labor and capital within a country is also maximized when all workers have the same MPL.
BKay
CC BY-SA 3.0
2016-11-07T16:59:26.120Z
@Linsky In the Heckscher-Ohlin model you have equal factor prices, but as long as the countries have a different allocation of factors there will be trade, precisely because otherwise prices would differ and you would not have an equilibrium.
Giskard
<international-trade>
Can not achieving complete factor price equalisation be good for world trade?
Linsky
# Can not achieving complete factor price equalisation be good for world trade?

(Asked by: username_0 on 2016-11-06)

I am just wondering whether not achieving FPE is good for world trade. My reason being that is that international trade keeps expanding until complete FPE is achieved, according to the Heckscher-Ohlin model. This means more trading so global economic growth keeps increasing so having positive chain reaction effect on the world right? I am thinking in the real-world as clearly some of the assumptions of the HO model do not hold in the real-world.

Edit: any links to good reading materials on this topic?

**Tags:** international-trade

> **Comments:**
> **username_1**: "more trading" compared to what? Perhaps if we would achieve FPE tomorrow we would have 'maximum trade'.  
> **username_0**: i.e. countries keep exporting and importing.Otherwise, if FPE is achieved why would a country choose to import goods if the good is the same price in its own country relative to another country?  
> **username_2**: Doesn't complete factor price equalization imply marginal product equalization as well? If it does than this implies a maximization of global output in the same way that allocating labor and capital within a country is also maximized when all workers have the same MPL.  
> **username_1**: @username_0 In the Heckscher-Ohlin model you have equal factor prices, but as long as the countries have a different allocation of factors there will be trade, precisely because otherwise prices would differ and you would not have an equilibrium.  

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