In order to compare

factor prices in the trade equilibrium, ??, with what they would have been in autarky, we take the ratio of (2) and (4).

Hence, adjustment takes place solely via changes in relative

factor prices.(4) When [x.sub.2]-production is abandoned, production conditions in the X-industry are fully embodied in the [x.sub.1]-isoquants.

Engelhardt attempts to show that Keynes's Marginal Efficiency of Capital (MEC) and the Net Present Value (NPV) always give identical rankings if

factor prices are flexible.

And third, as Feenstra and Hanson (1999), henceforth FH, demonstrate, if production is fragmented, changes in the parameters of the production function over time can shift the composition of activities that are performed abroad in a given industry, leading to non-neutral effects on productivity and

factor prices. Countries and industries with better access to overseas production activities, that is, larger levels of supplier access, would be more likely to observe such changes.

The long-run in our approach is defined as a period of time in which now

factor prices also vary, along with the quantity of labor and the general price level, while the capital stock and technology remain fixed.

Thus they affect relative

factor prices, total production, and output prices.

(3) Gross profit divided by value-added at

factor prices, where taxes on output, and subsidies for it, have been considered.

The three unknown

factor prices, W, r and [P.sub.Y], are determined from Equations (1-3) independent of the factor endowments.

Samuelson popularized the theory by casting it in a 2X2X2 form that laid out all of the necessary assumptions of the theory that had been left previously unstated, such as the need to assume that factor intensities don't reverse as

factor prices change.

These limitations have to do with the measurability of the autarky

factor prices which are used to calculate the different countries' factor abundance and the value of their factor intensity variables.

Rather than defend Keynes against Fuller's (2013) criticism, my purpose was to emphasize the flawed assumption of sticky

factor prices upon which Keynes's conclusions rest.

All

factor prices increase as a result of trade liberalization, ranging from 1.12% for the rental rate to 1.60% for the wages of unskilled and skilled labor.