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Making Sense of the Comparative Advantage Gains from Trade: Comment on Batra
Author(s) -
Bernhofen Daniel M.
Publication year - 2006
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2006.00653.x
Subject(s) - criticism , economics , comparative advantage , interpretation (philosophy) , consumption (sociology) , gains from trade , selection (genetic algorithm) , subject (documents) , neoclassical economics , positive economics , microeconomics , international trade , trade barrier , computer science , sociology , law , social science , artificial intelligence , library science , political science , programming language
This paper addresses Ravi Batra’s (2002) criticism of the basic comparative advantage gains‐from‐trade model. While Batra’s criticism is based on the selection view interpretation of real income, the gains from trade can only be properly understood from the options view interpretation of real income. I also show how a recent empirical implementation of the gains‐from‐trade model defies Batra’s claim that “the consumption gain . . . is not subject to measurement” (2002, p. 642).