Factor Price


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Factor Price

The price at which the means of production (that is, land, labor, capital and sometimes entrepreneurship) are sold. Economists disagree about what determines factor prices. Marxists and classical economists argue that factor prices represent the intrinsic value of the means of production. Other economists, however, believe that factor prices come from demand for the means of production.
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Keywords: Kuznets Curve, Gini Coefficient, Brazil, Factor Price Equalization
fixed input/output coefficients), because for small changes the alterations in techniques of production called for by factor price changes lead to second-order changes in unit costs.
Table 1 Types of Factors 1 2 3 4 5 Industrial Sector(s) A A B A C C B Sector Under Monopoly Yes Yes No Yes No No No Local DMVP 0 0 - 0 0 + - Schedule Change General DMVP 0 - 0 + - Schedule Change Factor Price Change - - - + - Types of Factors 6 7 8 Industrial Sector(s) D E A E Sector Under Monopoly No No Yes No Local DMVP 0 + 0 + Schedule Change General DMVP 0 + + Schedule Change Factor Price Change 0 + 0
This inelasticity is called near factor price equalization (NFPE).
While the analysis focuses on issues of labour adjustment associated with such convergence, it eclectically draws on the extensive literature, much of it recent, that has emerged in related areas: growth convergence and preconditions for growth; migration, resource rents and equalization payments; spatial convergence and the growth and decline of cities; neighbourhood effects and the social transmission of inequality; interjurisdictional competition for investment and jobs; and trade liberalization and factor price equalization.
International trade is introduced and general equilibrium yields the factor price equalization theorem.
This is purely a domestic factor price effect and is not influenced by the level of factor prices elsewhere.
Contrary to the original proof of this theorem, given by Vanek(4), factor price equalization is not assumed in Bertrand's model.
When an economy experiences emigration, the adjustment may involve various combinations of employment and factor price changes.
Using data from 1972-92, they conclude that all regions do not face the same relative factor price; rather, there are at least three distinct factor price cones.
For firms that reported zero expenditures on purchased transportation services or fuel, the average regional factor price was used as a proxy for the market price.