A Note on the Empirical Implementation of the Lens Condition

18 Pages Posted: 28 Jul 2005 Last revised: 14 Oct 2022

See all articles by Andrew B. Bernard

Andrew B. Bernard

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Raymond Robertson

Macalester College - Department of Economics

Peter K. Schott

Yale University - School of Management; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Date Written: July 2005

Abstract

Deardorff [Journal of International Economics 36 (1994) 167-175] offers an intuitively appealing test for factor price equality (FPE). He demonstrates that FPE is impossible if the set (i.e., lens) of points defined by regional factor abundance vectors does not lie within the set of points defined by goods' input intensities. This note demonstrates that empirical implementation of the lens condition is problematic if the "true" number of either goods or regions is unknown. We show that satisfaction of the lens condition is more likely when goods are relatively disaggregate compared to regions.

Suggested Citation

Bernard, Andrew B. and Robertson, Raymond E. and Schott, Peter K., A Note on the Empirical Implementation of the Lens Condition (July 2005). NBER Working Paper No. w11448, Available at SSRN: https://ssrn.com/abstract=755685

Andrew B. Bernard (Contact Author)

Dartmouth College - Tuck School of Business ( email )

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Raymond E. Robertson

Macalester College - Department of Economics ( email )

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Peter K. Schott

Yale University - School of Management ( email )

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National Bureau of Economic Research (NBER)

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Yale University - Cowles Foundation

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