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Comparative Advantages and Demand in the New Competitive Ricardian Models

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  • Carlos A. Cinquetti

Abstract

We survey the new Ricardian models of bilateral trade, which are seen as tractable structure for multi-country trade models addressing either cost or demand linkages to trade. Cost-based Ricardian models advance new forms of comparative advantages that are irrespective of autarky price and, in some cases, even of opportunity cost. A less noticed feature is their reliance in demand function that does not disturb cost-based prices. Demand-based Ricardian models hinge especially on non-homothetic preferences for asymmetric goods and the supply-side ordering of goods mirrors the demand-side ordering. We also critically discuss extensions of these latter competitive models to trade in quality. We further seek to identify all these models vis-à -vis the Ricardo–Haberler–Deardorff tradition. JEL: F10, 019, D5

Suggested Citation

  • Carlos A. Cinquetti, 2018. "Comparative Advantages and Demand in the New Competitive Ricardian Models," Foreign Trade Review, , vol. 53(1), pages 29-48, February.
  • Handle: RePEc:sae:fortra:v:53:y:2018:i:1:p:29-48
    DOI: 10.1177/0015732516681884
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    More about this item

    Keywords

    Ricardian models; multi-country economies; comparative advantages; demand; trade cost; non-homothetic preferences;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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