The Stolper-Samuelson Theorem:

1
The Stolper-Samuelson Theorem

• Assumptions
• One country produces two goods (wheat and cloth)
  with two factors of production (capital and
  labor)
• neither good is an input into the production of
  the other
• competition prevails
• factor supplies are given
• both factors are fully employed
• both factors are mobile between sectors (but not
  between countries)
• one good (wheat) is capital-intensive and the
  other (cloth) is labor-intensive)
• opening trade raises the relative price of the
  export good.

2
The Stolper-Samuelson Theorem

• moving from no trade to free trade raises the
  returns to the factor used intensively in the
  rising-price industry, and lowers the returns to
  the factor used intensively in the falling-price
  industry, regardless of which goods the sellers
  of the two factors prefer to consume