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Comparative Advantage: From an Individual to the Economy AgEcon
Rajsic, Predrag.
This paper identifies an internal inconsistency in the Heckscher-Ohlin (H-O) models of international exchange. The inconsistency stems from assuming homogeneity of inputs within a population. This assumption annihilates individual comparative advantage, benefits from exchange and, consequently, existence of autarky prices. In order to remove this inconsistency, I build a two-good multi-individual model by using the microeconomic concept of individual comparative advantage stemming from differences in endowments of qualitatively heterogeneous inputs. The model shows how differences in the distribution of individual production possibilities result in individual specialization, exchange and differences in autarky prices between hypothetically isolated...
Tipo: Conference Paper or Presentation Palavras-chave: Comparative advantage; Heckscher-Ohlin model; Input heterogeneity; Microeconomic foundations; International Relations/Trade; F11; D51.
Ano: 2010 URL: http://purl.umn.edu/61299
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