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Multilateral Comparative Advantage

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  • Henry Thompson

Abstract

This paper shows relative price competition based on comparative advantage can lead to diversified production and complex trade for more than two countries and two goods. The present paper develops the trade patterns for three and four countries and goods based on trade between the extreme countries in each relative price ranking with the directions of trade for middle countries depending on the terms of trade. The possible trade patterns include diversified exports, nontraded goods, nontrading countries, two-way trade in the same good, and separate trade groups.

Suggested Citation

  • Henry Thompson, 2023. "Multilateral Comparative Advantage," Auburn Economics Working Paper Series auwp2023-07, Department of Economics, Auburn University.
    • Handle: RePEc:abn:wpaper:auwp2023-07
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    File URL: https://cla.auburn.edu/econwp/Archives/2023/2023-07.pdf
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    References listed on IDEAS

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    1. Jonathan Eaton & Samuel Kortum, 2012. "Putting Ricardo to Work," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 65-90, Spring.
    2. Ruffin, Roy J, 1988. "The Missing Link: The Ricardian Approach to the Factor Endowments Theory of Trade," American Economic Review, American Economic Association, vol. 78(4), pages 759-772, September.
    3. Maneschi, Andrea, 2004. "The true meaning of David Ricardo's four magic numbers," Journal of International Economics, Elsevier, vol. 62(2), pages 433-443, March.
    4. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517, Elsevier.
    5. Ronald W. Jones, 1961. "Comparative Advantage and the Theory of Tariffs: A Multi-Country, Multi-Commodity Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(3), pages 161-175.
    6. Roy J. Ruffin, 2002. "David Ricardo's Discovery of Comparative Advantage," History of Political Economy, Duke University Press, vol. 34(4), pages 727-748, Winter.
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    Keywords

    Comparative Advantage; Trade Patterns;

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