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The Basics of International Trade: A Classroom Experiment

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Author Info

  • Alberto Isgut

    ()
    (Institute for Competitiveness & Prosperity, Toronto, Ontario M5S 2V6)

  • Ganesan Ravishanker

    ()
    (ITS, Wesleyan University)

  • Tanya Rosenblat

    ()
    (Department of Economics, Wesleyan University)

Abstract

We introduce a simple web-based classroom experiment in which students learn the Ricardian model of international trade. Students are assigned to countries and then make individual production, trade and consumption decisions. The analysis of experimental data introduces students to the concepts of absolute and comparative advantage, relative prices, production possibility frontier, specialization, gains from trade, utility maximization and general equilibrium. Students learn about the relationship between individual decision-making and aggregate economic activity. The associated software, Ricardian Explorer, is easy to setup and requires minimal preparation time for instructors. The game is developed as a tool to complement courses in international trade, but it can be used in introductory and intermediate microeconomics courses as well. The analysis of teaching effectiveness has demonstrated that integration of this experiment in the curriculum enhances student learning.

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File URL: http://repec.wesleyan.edu/pdf/aisgut/2005013_isgut.pdf
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Bibliographic Info

Paper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2005-013.

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Length: 24 pages
Date of creation: May 2005
Date of revision:
Handle: RePEc:wes:weswpa:2005-013

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Related research

Keywords: Absolute advantage; comparative advantage; specialization; production possibility frontier; gains from trade; utility maximization; general equilibrium; classroom experiments;

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  1. Charles A. Holt, 1999. "Teaching Economics with Classroom Experiments: A Symposium," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 603-610, January.
  2. Krugman, Paul R, 1993. "What Do Undergrads Need to Know about Trade?," American Economic Review, American Economic Association, American Economic Association, vol. 83(2), pages 23-26, May.
  3. Joseph Santos, 2002. "Developing and Implementing an Internet-Based Financial System Simulation Game," The Journal of Economic Education, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(1), pages 31-40, January.
  4. Noussair, Charles N & Plott, Charles R & Riezman, Raymond G, 1995. "An Experimental Investigation of the Patterns of International Trade," American Economic Review, American Economic Association, American Economic Association, vol. 85(3), pages 462-91, June.
  5. Geert B. Woltjer, 2005. "Decisions and Macroeconomics: Development and Implementation of a Simulation Game," The Journal of Economic Education, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(2), pages 139-144, April.
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