Trade and Technology: The Ricardian Model - Faculty
Trade and Technology: The Ricardian Model - Faculty
Trade and Technology: The Ricardian Model - Faculty
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Setup<br />
<strong>The</strong>re are two countries: Home <strong>and</strong> Foreign.<br />
<strong>The</strong>re is one factor of production: labor. <strong>The</strong> supply of<br />
labor is constant in each country.<br />
<strong>The</strong>re are two goods: wine <strong>and</strong> cheese.<br />
International Commercial Policy<br />
<strong>The</strong> <strong>Ricardian</strong> <strong>Model</strong><br />
Labor productivity varies across countries <strong>and</strong> goods<br />
but does not vary with output (i.e. the technology<br />
features constant returns to scale).<br />
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