Under the theory of comparative advantage two nations that each have a cost advantage in the production of a specific product would both benefit from free trade by selling to each other since the total output of both nation's products sold would increase. The mathematical theory of comparative advantage was formalized by David Ricardo in 1817 and hence became known as the "Ricardian model." Economists have long debated the usefulness of the comparative advantage model in the real world since it is counter-intuitive to many people due to the fact that the model is based on two countries producing only two goods and only one factor of production (such as labor). In addition, the model computes comparative cost advantages based on which nation produces goods at a lower opportunity cost which implies that a nation would have to forgo the production of other goods in order to achieve the lowest comparative advantage.
Many economists and student of foreign trade prefer to use the theory of absolute advantage in production which is easy to understand since it is intuitive. Under the absolute advantage theory two countries that each produce a particular good at a much lower cost than the other would both become wealthier as they increased production to sell their goods to each other.
The modern theory of international trade works on assumptions of the law of comparative advantage. The comparative advantage arises as a result of differences in the various regions.
in which it has a comparative advantage in producing
Trade arises under comparative advantage because of differences in pretrade relative prices.
discuss the growing importance of the global market and the roles of comparative advantage and absolute advantage in global trade?
comparative cost advantage
The modern theory of international trade works on assumptions of the law of comparative advantage. The comparative advantage arises as a result of differences in the various regions.
in which it has a comparative advantage in producing
Trade arises under comparative advantage because of differences in pretrade relative prices.
Andrea Maneschi has written: 'Comparative advantage in international trade' -- subject(s): Econometric models, Comparative advantage (International trade), International trade
discuss the growing importance of the global market and the roles of comparative advantage and absolute advantage in global trade?
comparative cost advantage
comparative advantage
Andrew rules
Li-kang Sung has written: 'Changing global comparative advantage' -- subject(s): Econometric models, Commerce, Comparative advantage (International trade), International trade
comparative advantage
whatever, Get lost. The answer isn't here :P
the principle of comparative advantage