EclectEcon

Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca


. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Friday, April 29, 2005

A Slightly Different Version
of Comparative Advantage

From Forbes magazine (link courtesy of Newmark's Door):

The more transparent an economy becomes, the more David Ricardo's 19th-century law of comparative advantage rules the day. Then came the commercial Internet, the greatest window into comparative advantage ever invented. Which means if your firm's price-value proposition is lousy, too bad. The world knows.
Well, that is one way of looking at comparative advantage. Here is another.

What matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things.
 
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