Even if capital is immobile, the economy may have other means of adjustment which
dampen effects on factor returns. For example, if the economy produces more than
one type of output then changes in the output mix may alone be sufficient to absorb
the impact of immigration. Suppose there are two industries A and B, each with
constant returns to scale production technologies, y
A = f A
(KA
/LA
) and y
B = f B
(KB
/
LB
), where superscripts denote quantities specific to the relevant sectors and
L = LA + LB
, K = KA + KB
. Suppose that output in each sector is again traded at
prices fixed on world markets, pA* and pB*
. Mobility of factors between sectors means
that returns to factors in each industry must be equal so that