Premium
An Elementary Theory of Comparative Advantage
Author(s) -
Costinot Arnaud
Publication year - 2009
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta7636
Subject(s) - factor endowment , comparative advantage , complementarity (molecular biology) , economics , trade theory , endowment , simple (philosophy) , generalization , neoclassical economics , mathematical economics , core (optical fiber) , elementary theory , international trade , computer science , trade barrier , mathematics , programming language , mathematical analysis , telecommunications , philosophy , genetics , epistemology , biology
Comparative advantage, whether driven by technology or factor endowment, is at the core of neoclassical trade theory. Using tools from the mathematics of complementarity, this paper offers a simple yet unifying perspective on the fundamental forces that shape comparative advantage. The main results characterize sufficient conditions on factor productivity and factor supply to predict patterns of international specialization in a multifactor generalization of the Ricardian model which we refer to as an “elementary neoclassical economy.” These conditions, which hold for an arbitrarily large number of countries, goods, and factors, generalize and extend many results from the previous trade literature. They also offer new insights about the joint effects of technology and factor endowments on international specialization.