Terms of Trade, Competitive Advantage, and Trade Patterns

Ramaa Vasudevan

Review of Political Economy, 2012, vol. 24, issue 2, 183-202

Abstract: This paper investigates the competitive determination of the pattern of trade, seen as a choice of technique problem within a two-country, two-commodity, circulating capital model. It seeks to re-examine the analytical premises of the principle of comparative advantage. The establishment of competitive advantage is addressed in a Sraffian framework that allows the integration of the choice of technique problem to issues of growth and distribution. The focus is on exploring the validity of this principle when capital is internationally immobile—the context in which the principle was first postulated. Capital immobility imparts a degree freedom to the model. Closing the model and establishing a trade outcome on the basis of the principle of comparative advantage depends on the specification of appropriate boundary conditions. These boundary conditions boil down to some specification of relative scales of the trading partners and the scope for complete specialization and mutually beneficial gains from trade is circumscribed.

Date: 2012
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/09538259.2012.664324 (text/html)
Access to full text is restricted to subscribers.

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:taf:revpoe:v:24:y:2012:i:2:p:183-202

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CRPE20

DOI: 10.1080/09538259.2012.664324

Access Statistics for this article

Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon

More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().