NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Note on the Empirical Implementation of the Lens Condition

Andrew B. Bernard, Raymond Robertson, Peter K. Schott

NBER Working Paper No. 11448
Issued in July 2005
NBER Program(s):   ITI

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.

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Document Object Identifier (DOI): 10.3386/w11448

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