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Competitive versus comparative advantage
Author(s)
Date Issued
2002-08
Date Available
2009-07-29T12:12:00Z
Abstract
I explore the interactions between comparative, competitive and absolute advantage in a two-country model of oligopoly in general equilibrium. Comparative advantage always determines the direction of trade, but both competitive and absolute advantage affect resource
allocation, trade patterns and trade volumes. Competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive. Absolute advantage in the sense of a uniform fall in home costs tends to raise home output in all sectors but also leads both countries to specialise less in accordance with comparative advantage.
Sponsorship
Economic and Social Research Council (ESRC)
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP02/19
Classification
F10
F12
Subject – LCSH
Comparative advantage (International trade)
International trade
Oligopolies
Competition
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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