Disadvantaging Comparative Advantages: The Problem of Decreasing Returns

Kunibert Raffer

Chapter 5 in Market Forces and World Development, 1994, pp 75-89 from Palgrave Macmillan

Abstract: Abstract The effects of increasing returns to scale have been discussed for quite some time by economists focusing on trade theory. By contrast, the case of decreasing returns has not received much attention so far. Even though this latter case was classified as posing little analytical difficulty by Jones and Neary (1984, p. 48), it is of particular interest because absolutely rational specialisation according to (static) comparative costs may finally result in immiserisation and decreased (global) output.

Keywords: Free Trade; Comparative Advantage; Technical Progress; Excess Demand; Excess Supply (search for similar items in EconPapers)
Date: 1994
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DOI: 10.1007/978-1-349-23138-6_5

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