CH02 Labor productivity comparative advantage the Ricardian model(国际经济学-厦门大学 陈涛)教材课程.ppt

3 10 Apples 8 Bananas 4 Caviar 2 Dates 0.75 Enchiladas RD Comparative Advantage with Many Goods Figure 2-5: Determination of Relative Wages RS Relative wage Rate, w/w* Relative quantity of labor, L/L* Adding Transport Costs and Nontraded Goods There are three main reasons why specialization in the real international economy is not extreme: The existence of more than one factor of production. Countries sometimes protect industries from foreign competition. It is costly to transport goods and services. The result of introducing transport costs makes some goods nontraded. In some cases transportation is virtually impossible. Example: Services such as haircuts and auto repair cannot be traded internationally. Summary We examined the Ricardian model, the simplest model that shows how differences between countries give rise to trade and gains from trade. In this model, labor is the only factor of production and countries differ only in the productivity of labor in different industries. In the Ricardian model, a country will export that commodity in which it has comparative (as opposed to absolute) labor productivity advantage. The fact that trade benefits a country can be shown in either of two ways: We can think of trade as an indirect method of production. We can show that trade enlarges a country’s consumption possibilities. The distribution of the gains from trade depends on the relative prices of the goods countries produce. Summary Extending the one-factor, two-good model to a world of many commodities makes it possible to illustrate that transportation costs can give rise to the existence of nontraded goods. The basic prediction of the Ricardian model-that countries will tend to export goods in which they have relatively high productivity- has been confirmed by a number of studies. Summary * CHAPTER 2 LABOR PRODUCTIVITY COMPARATIVE ADVANTAGE THE RICARDIAN MODEL Chapter Organization Introduction The Concept of Comparative Advanta