The Ricardian Model

Alan Deardorff

No 564, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: This essay was written for the Princeton Encyclopedia of the World Economy. The Ricardian Model describes a world in which goods are competitively produced from a single factor of production, labor, using constant-returns-to-scale technologies that differ across countries and goods. With only two goods and two countries, the standard textbook model shows that countries will export the good in which they have comparative advantage. Equilibrium takes two forms, one with both countries completely specialized and gaining from trade, the other with one country producing both goods and neither gaining nor losing from trade. The model is easily extended to more than two goods or more than two countries, but not both. Important extensions have been provided by Dornbusch, Fischer, and Samuelson (1977) to a continuum of goods with two countries, and by Eaton and Kortum (2002) to a continuum of goods with many countries and random technologies.

Keywords: Ricardian Model; Comparative Advantage (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2007
New Economics Papers: this item is included in nep-hpe and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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