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The Basics of International Trade: A Classroom Experiment

Author

Listed:
  • 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.

Suggested Citation

  • Alberto Isgut & Ganesan Ravishanker & Tanya Rosenblat, 2005. "The Basics of International Trade: A Classroom Experiment," Wesleyan Economics Working Papers 2005-013, Wesleyan University, Department of Economics.
    • Handle: RePEc:wes:weswpa:2005-013
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    File URL: http://repec.wesleyan.edu/pdf/aisgut/2005013_isgut.pdf
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    References listed on IDEAS

    as
    1. Krugman, Paul R, 1993. "What Do Undergrads Need to Know about Trade?," American Economic Review, American Economic Association, vol. 83(2), pages 23-26, May.
    2. Geert B. Woltjer, 2005. "Decisions and Macroeconomics: Development and Implementation of a Simulation Game," The Journal of Economic Education, Taylor & Francis Journals, vol. 36(2), pages 139-144, April.
    3. Joseph Santos, 2002. "Developing and Implementing an Internet-Based Financial System Simulation Game," The Journal of Economic Education, Taylor & Francis Journals, vol. 33(1), pages 31-40, January.
    4. Charles N. Noussair & Charles R. Plott & Raymond G. Riezman, 2013. "An Experimental Investigation of the Patterns of International Trade," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 17, pages 299-328, World Scientific Publishing Co. Pte. Ltd..
    5. Charles A. Holt, 1999. "Teaching Economics with Classroom Experiments: A Symposium," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 603-610, January.
    6. Stephen J. Schmidt, 2003. "Active and Cooperative Learning Using Web-Based Simulations," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(2), pages 151-167, January.
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    Cited by:

    1. Eric P. Chiang, 2007. "Asymmetric Information, Bargaining, and Comparative Advantage in Trade Relationships: An Interactive Game," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 601-608, October.

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    More about this item

    Keywords

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