Exclusion in “Ricardian” Trade Models

Eduardo Crespo (), Ariel Dvoskin () and Guido Ianni
Additional contact information
Eduardo Crespo: Institute of Economics, Federal University of Rio de Janeiro
Ariel Dvoskin: CONICET - IDAES National University of San Martín

No CSWP39, Centro Sraffa Working Papers from Centro di Ricerche e Documentazione "Piero Sraffa"

Abstract: The paper discusses the following result of the so-called ‘Ricardian’ models of international trade: the impossibility of exclusion from trade. We show that this result holds due to the very restrictive assumptions behind these models: (i) commodities are produced by unassisted labour alone under (ii) complete factor immobility. The moment these assumptions are relaxed, the likelihood of exclusion can no longer be neglected. The reason is the following: even if there were no limits to the fall in the rate of domestic real wages, production costs would reach a positive lower bound due to the presence of imported capital goods. Exclusion is therefore the result of this lower bound being higher than the prevailing international price, for both capital and consumption-goods sectors

Keywords: absolute advantage; comparative advantage; exclusion from trade; pattern of specialization; Ricardian models of trade (search for similar items in EconPapers)
JEL-codes: B27 B51 F11 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2019-12-17
New Economics Papers: this item is included in nep-hme, nep-int and nep-ore
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Exclusion in ‘Ricardian’ Trade Models (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:sraffa:0039

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