StolperSamuelson

The Stolper-Samuelson theorem is a result in international trade theory named after economists Wolfgang Stolper and Paul A. Samuelson. Introduced in 1941, it analyzes how changes in the prices of traded goods affect the real incomes of factors of production within a country, under a simplified production structure.

In the standard two-good, two-factor framework with perfect competition and identical technologies across sectors, an increase in the relative price of a good raises the real return to the factor used intensively in producing that good and lowers the real return to the other factor. Consequently, opening trade tends to benefit the abundant factor and hurt the scarce factor, assuming other conditions hold.

Commonly cited assumptions include: two factors (labor and capital) and two goods; constant returns to scale; factors immobile internationally but mobile domestically; perfect competition; factors paid their values of marginal product; and identical technologies across sectors.

Implications and limitations: The theorem provides a mechanism for explaining how trade can affect income distribution. In practice, results depend on country composition and technology, and extensions consider more factors, such as skilled versus unskilled labor, or different technologies and institutional factors. Empirical tests yield mixed support, and departures from the model's assumptions can weaken its predictions.