Rybczynski theorem

The Rybczynski theorem was developed in 1955 by the Polish-born English economist Tadeusz Rybczynski (1923–1998). It states that at constant relative goods prices, a rise in the endowment of one factor will lead to a more than proportional expansion of the output in the sector which uses that factor intensively, and an absolute decline of the output of the other good. Eventually, across both countries, market forces would return the system toward equality of production in regard to input prices such as wages (the state of factor price equalization).

Rybczynski theorem

The Rybczynski theorem was developed in 1955 by the Polish-born English economist Tadeusz Rybczynski (1923–1998). It states that at constant relative goods prices, a rise in the endowment of one factor will lead to a more than proportional expansion of the output in the sector which uses that factor intensively, and an absolute decline of the output of the other good. Eventually, across both countries, market forces would return the system toward equality of production in regard to input prices such as wages (the state of factor price equalization).