Comparative Advantage and Trade Patterns
In the pure theory of international trade the foundation of commodity exchange is based upon differences in autarky relative prices. The theory of comparative advantage attempts to precisely define this foundation by formulating a systematic relationship between the pattern of comparative advantages and the combination of international commodity trade. The purpose of this paper is to demonstrate the validity of a weak form of the law of comparative advantage, that is, that the pattern of international trade is determined by comparative advantage. The following elucidates the relationship between comparative advantages and international trade patterns with the aid of the revenue and expenditure function, the so-called duality approach.
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- 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.
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