Competitive versus comparative advantage

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Title: Competitive versus comparative advantage
Authors: Neary, J. Peter
Permanent link: http://hdl.handle.net/10197/1325
Date: Aug-2002
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.
Funding Details: Economic and Social Research Council (ESRC)
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP02/19
Keywords: Comparative and absolute advantageComparative and competitive advantageExchange-rate protectionGOLE (General Oligopolistic Equilibrium)Market integration
Subject LCSH: Comparative advantage (International trade)
International trade
Oligopolies
Competition
Other versions: http://www.ucd.ie/economics/research/papers/2002/WP02.19.pdf
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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