TY - JOUR
T1 - An antinomy in the theory of comparative advantage
AU - Drabicki, John Z.
AU - Takayama, Akira
PY - 1979/5
Y1 - 1979/5
N2 - This paper shows that the usual bilateral rule of comparing relative prices under autarky to determine the pattern of trade is not valid for the multicommodity world. In addition, equilibrium world price ratios need not fall between the corresponding price ranges under autarky. Such a paradox disappears under gross substitutability when the third commodity is a nontradeable. For the case of tradeables, an alternative bilateral rule to determine the pattern of trade is proposed. Since the classical constant cost case has been heavily discussed in the literature, we confine ourselves to the neoclassical case.
AB - This paper shows that the usual bilateral rule of comparing relative prices under autarky to determine the pattern of trade is not valid for the multicommodity world. In addition, equilibrium world price ratios need not fall between the corresponding price ranges under autarky. Such a paradox disappears under gross substitutability when the third commodity is a nontradeable. For the case of tradeables, an alternative bilateral rule to determine the pattern of trade is proposed. Since the classical constant cost case has been heavily discussed in the literature, we confine ourselves to the neoclassical case.
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U2 - 10.1016/0022-1996(79)90004-7
DO - 10.1016/0022-1996(79)90004-7
M3 - Article
AN - SCOPUS:0008290083
SN - 0022-1996
VL - 9
SP - 211
EP - 223
JO - Journal of International Economics
JF - Journal of International Economics
IS - 2
ER -