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Breaks in the chain of comparative advantage

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  • Choi, E. Kwan
  • Thompson, Henry

Abstract

The chain proposition of comparative advantage states that when factor prices differ between two countries producing many products with two factors, every export of the capital abundant country would be more capital intensive than any of its imports. The present note points out that an economy has the option to break the chain to reach full employment if its factor endowment is not spanned by the production cone of the more intensive products.

Suggested Citation

  • Choi, E. Kwan & Thompson, Henry, 2010. "Breaks in the chain of comparative advantage," International Review of Economics & Finance, Elsevier, vol. 19(2), pages 346-348, April.
    • Handle: RePEc:eee:reveco:v:19:y:2010:i:2:p:346-348
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    4. Choi, E. Kwan, 2008. "Factor growth and equalized factor prices," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 517-528, October.
    5. Chao, Chi-Chur & Yu, Eden S.H., 2007. "Trade liberalization, foreign ownership, and the environment in a small open economy," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 471-477.
    6. Nevin Cavusoglu & Bruce Elmslie, 2005. "The Chain Version of Comparative Advantage: An Empirical Investigation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(3), pages 404-421, October.
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    Keywords

    Chain Comparative advantage;

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