Production and Gains from Trade

Lisa Anderson (), Emily J. Blanchard (), Kelly Chaston (), Charles A. Holt (), Laura Razzolini and Robert Singleton ()
Additional contact information
Lisa Anderson: Department of Economics, College of William and Mary
Kelly Chaston: Department of Economics, Davidson College
Robert Singleton: Department of Economics, Loyola Marymount University

No 16, Working Papers from Department of Economics, College of William and Mary

Abstract: This paper describes a classroom game in which students make production and trade decisions. Each student represents a country and decides how much of two goods to produce, how much to exchange with a partner country, and whether to specialize in the production of one of the two goods. In introductory level classes, the game helps students understand the notion of comparative advantage in production and distinguish between gains from pure exchange and gains from specialization and trade. Class discussion focuses on the concepts of production possibility frontier, marginal productivity of inputs, and on the determination of the price ratio at which trade may occur. In advanced classes, the exercise facilitates comparisons among different models of international trade and serves as a platform from which to introduce and discuss key issues in current research and public debate.

Keywords: Classroom Experiment; International Trade; Comparative Advantage; Production Possibility Frontier; Price Ratio (search for similar items in EconPapers)
JEL-codes: F10 A22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2005-05-11

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