An Elementary Theory of Comparative Advantage

No 14645, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Comparative advantage, whether driven by technology or factor endowment, is at the core of neoclassical trade theory. Using tools from the mathematics of complementarity, this paper offers a simple, yet unifying perspective on the fundamental forces that shape comparative advantage. The main results characterize sufficient conditions on factor productivity and factor supply to predict patterns of international specialization in a multi-factor generalization of the Ricardian model to which we refer as an "elementary neoclassical economy." These conditions, which hold for an arbitrarily large number of countries, goods, and factors, generalize and extend many results from the previous trade literature. They also offer new insights about the joint effects of technology and factor endowments on international specialization.

JEL-codes: F10 F11 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-int
Note: ITI
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Citations: View citations in EconPapers (168)

Published as Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," Econometrica, Econometric Society, vol. 77(4), pages 1165-1192, 07.

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