Stolper–Samuelson theorem

A result in trade theory stating that a rise in a good’s relative price raises the real return to the factor used intensively to produce it and lowers the other factor’s real return.

Heckscher–Ohlin model: A trade model explaining comparative advantage through differences in countries’ factor endowments. The theorem derives its factor-price result within this model’s assumptions about production and trade.
Factors of production: Inputs used to produce goods and services, such as labor, capital, land, and natural resources. The theorem tracks how a goods-price shift redistributes income among production inputs.
Trade liberalization: The reduction or removal of barriers to international trade. Lower trade barriers can change domestic goods prices and thereby shift wages and returns to capital.
Wolfgang Stolper: An Austrian-American economist known for work on international trade and economic development. He co-authored the 1941 article that established the theorem.
Factor intensity: The relative amount of one production factor used compared with another in producing a good. The theorem’s direction depends on which factor is used more intensively in the good whose price rises.
Relative price: The price of one good expressed in units of another good. The theorem concerns changes in a good’s price relative to the other good’s price.
Income distribution: The way income is divided among people, households, or production factors. The theorem predicts redistribution between factors as relative goods prices change.
Paul Samuelson: An American economist whose work shaped modern economic theory and mathematical economics. He co-authored the theorem’s foundational paper with Wolfgang Stolper.
Zero-profit condition: A competitive-market condition in which each good’s price equals its unit production cost. Fixed goods prices constrain wages and rents through the unit costs firms must cover.
Real wage: A worker’s wage measured by the quantity of goods and services it can buy. The theorem predicts changes in purchasing power, not just money wages.

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