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How Robust is Comparative Advantage?

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Author Info
Alan V. Deardorff (University of Michigan)

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Abstract

This paper reviews the theoretical development of the concept of comparative advantage, starting with the two-good model of Ricardo and the two-good extension and reinterpretation by Haberler. In both, the presence of comparative advantage provides the scope for countries to gain from trade by specializing, and the pattern of that trade is explained by the pattern of comparative advantage. These strong results of the two-good model can be extended under certain circumstances to multiple goods and countries, but under more general assumptions such strong results no longer are assured. Instead one can derive much weaker results, usually in the form of correlations between comparative advantage and trade, and these weaker results hold in a much wider variety of circumstances. The paper examines those assumptions that permit such generalizations, but then also examines when those assumptions are most likely to fail, and what happens as a result.

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File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers526-550/r537.pdf
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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 537.

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Length: 27 pages
Date of creation: 2005
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Handle: RePEc:mie:wpaper:537

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Deardorff, Alan V., 2005. "Ricardian comparative advantage with intermediate inputs," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 11-34, March. [Downloadable!] (restricted)
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  2. Alan Deardorff, 1994. "Exploring the limits of comparative advantage," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(1), pages 1-19, March. [Downloadable!] (restricted)
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  3. Deardorff, Alan V., 1979. "Weak links in the chain of comparative advantage," Journal of International Economics, Elsevier, vol. 9(2), pages 197-209, May. [Downloadable!] (restricted)
  4. Courant, Paul N & Deardorff, Alan V, 1992. "International Trade with Lumpy Countries," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 198-210, February. [Downloadable!] (restricted)
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  5. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-39, December. [Downloadable!] (restricted)
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  6. Deardorff, Alan V, 1980. "The General Validity of the Law of Comparative Advantage," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 941-57, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mark Lutz, 2008. "Revisiting the Relevance of International Trade Theory," Forum for Social Economics, Springer, vol. 37(2), pages 147-164, August. [Downloadable!] (restricted)
  2. Dogaru, Vasile, 2005. "The general validity of comparative advantage in trade exchanges," MPRA Paper 6882, University Library of Munich, Germany. [Downloadable!]
  3. Dogaru, Vasile, 2005. "Some observations regarding the demythification of the comparative advantage’s principle within Manoilescu generalized scheme," MPRA Paper 6918, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-11-25.

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