Economics Stack Exchange
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Questions tagged [comparative-advantage]

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Ricardo's theory of comparative advantage for many countries

In textbooks on economics the Ricardo theory of comparative advantages is explained on the example of two countries with two goods. I suppose, there must be generalizations of Ricardo's theory for several countries with several goods. Can anybody…
Sergei Akbarov
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Intuition behind Comparative Advantange

I already read and ask NOT about pp 52-54, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw. I understand such numerical examples that corroborate Comparative Advantage, but how can I intuit comparative advantage? I wish to quash my…
user4020
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Who exploits comparative advantage in international trade?

Suppose that under autarky, Colombia makes coffee and cars at \$1 and \$2 each, and Japan makes coffee and cars at \$20 and \$10 each. Since Japan has a comparative advantage in car manufacture, the standard theory says that Colombia will import…
knzhou
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Can people lack a comparative advantage and a comparative disadvantage?

Source: Question 9b, p 61, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw = Question 8b in Principles of Microeconomics, 4 Ed, 2008 9. Are the following statements true or false? Explain in each case. b. “Certain very talented…
user4020
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Does free capital mobility invalidate the basic comparative advantage argument for free trade in goods?

In Herman Daly's article "Economics for a Full World", Daly states that international trade must be regulated because free capital mobility would invalidate the principle of comparative advantage (Daly, 2015, p.12). As a reference, he cites John…
RollingCompass
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Correct Calculation of Balassa Revealed Comparative Advantage (with full trade data)

The typical approach to computing RCA (Revealed Comparative Advantage) is the Balassa definition: $RCA=\frac{\frac{X_cp}{\sum_{p=1}^{P}{X_cp}}}{\frac{\sum_{c=1}^{C}{X_cp}}{\sum_{c=1,p=1}^{C,P}{X_cp}}}=\frac{Product Export Share in Country C}{Product…
sanguineturtle
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Why does anyone prepare their own food?

I'm not an econ person, so this is a super naive question, but here goes: why, given the comparative advantage that specialization produces, does anyone prepare their own food rather than buying from restaurants all the time? It seems like there…
Rando McRandom
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Does trade between countries tend towards a state of only containing monopolies as a result of comparative advantage?

I've recently been reading Mankiw's Microeconomics 8th edition. In there he raises the idea of comparative advantage and points out how if we have two participants in an economy who both produce apples and oranges, with participant being more…
Shane Lee
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Does comparative advantage maximize revenue?

I am reading Lovell's "Economics with calculus", where in Chapter 2, he presents Ricardo's Theory of Comparative Advantage, and states how in a simple model two countries benefit from free trade. He shows that free trade between two countries $1$…
Gaston Barboza
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(Modified comparative advantage model)Can trade with a country that only has one industry be mutually beneficial?

Suppose there are two countries, China and Japan. Suppose there are also only two goods, namely food and bronze mirrors. China produces both food and bronze mirrors, while Japan produces only food. In order to produce 1 unit of food China has to…
user161005
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Real world evidence that voluntary exchange is mutually beneficial?

The other day I was having a debate with a supporter of high taxes. I decided to argue against this by explaining the concept of the deadweight loss of taxation. In order to do so, I started with the following example, to explain the deadweight…
Appguy1
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Basic question on trade based on comparative advantage

The following question is taken from Economics: Principles and Applications 6th Edition, by Hall and Lieberman. This question about applying the theory of comparative advantage between a hypothetical trade situation between US and China. Trade…
Charlz97
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Is comparative advantage only beneficial with convex utility functions?

I've been playing around with the numbers associated with the traditional comparative advantage problem provided by Ricardo. (https://en.wikipedia.org/wiki/Comparative_advantage) I looked at comparative advantage in my Econ 101 class, but I was…
Brandon
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Lectures notes on international trade

do you have any lecture notes covering the theories of international trade (Ricardian models, HOS, Melitz...)? I have a master in quantitative econ so I'd be happy to have both basic references and more quantitative ones. Thanks!
BAL
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What is technology in the Ricardo model?

I've been reading about the Ricardo and Heckscher-Ohlin models. I'm having trouble following what makes a worker in the former able to produce more or less of a given good. So e.g. suppose a US worker can produce 10 computers a day where a Mexican…
Mohan
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