Comparative Cost and Factor Endowments: Ricardo and Ohlin

Bjarne S. Jensen

Chapter 4 in Positive and Normative Analysis in International Economics, 2012, pp 54-83 from Palgrave Macmillan

Abstract: Abstract The concept (law, principle) of comparative advantage is due to Ricardo (1817, Ch. 7) — the term is also found in Ricardo (1817, Ch. 19, p. 175), cf. Ruffin (2002, p. 743). The expression ‘what a country can do most cheaply’ needed careful examination, and it was in analysing this idea more sharply that Ricardo enunciated the principle (term) of comparative advantage. The Ricardian term means the ability to produce a good at lower cost (relative to other goods), compared with another country. With perfect market competition relative costs are also relative autarchy prices, and the law of comparative advantage (cost) says that a country exports (imports) the good with the low (high) relative autarchy price. This Law of Comparative Costs will always remain a fundamental principle of economics and international trade.

Keywords: Gross Domestic Product; General Equilibrium; Factor Price; Factor Endowment; Price Ratio (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-34820-2_5

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230348202

DOI: 10.1057/9780230348202_5

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().