The General Validity of the Law of Comparative Advantage

Alan Deardorff

Chapter 10 in Comparative Advantage, Growth, and the Gains from Trade and Globalization:A Festschrift in Honor of Alan V Deardorff, 2011, pp 73-90 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractIt is well known that the law of comparative advantage breaks down when applied to individual commodities or pairs of commodities in a many-commodity world. This paper shows that the law is nonetheless valid if restated in terms of averages across all commodities. Specifically, a theorem and several corollaries are derived which establish correlations between vectors of trade and vectors containing relative-autarky-price measures of comparative advantage. These results are proven in a general many-commodity model that allows for tariffs, transport costs, and other impediments to trade.

Keywords: Comparative Advantage; Trade And Growth; Globalization; Computational Modeling; Trade Policy Analysis (search for similar items in EconPapers)
Date: 2011
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Journal Article: The General Validity of the Law of Comparative Advantage (1980)
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