Trade and Technology: The Ricardian Model - Faculty

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Introduction Countries trade either because they are different from one another or because of increasing returns to scale. Countries may differ from one another in terms of technology, endowments, or preferences. The Ricardian model emphasizes technological differences. 2  International Commercial Policy The Ricardian Model
Introduction (cont.) International Commercial Policy The Ricardian Model Despite its simplicity, the Ricardian model allows us to illustrate several fundamental insights of international trade theory. Most importantly, it allows us to think clearly about the concepts of absolute and comparative advantage and their roles in determining the pattern of trade and the gains from trade. In “The Accidental Theorist”, Krugman nicely illustrates the usefulness of simple models. 3 
Page 1: Trade and Technology: The Ricardian
Page 5 and 6: Opportunity cost International Comm
Page 7 and 8: Opportunity cost (cont.) Internatio
Page 9 and 10: Opportunity cost (cont.) Internatio
Page 11 and 12: Comparative advantage (cont.) Milli
Page 13 and 14: Setup There are two countries: Home
Page 15 and 16: Autarky: Unit labor requirement Int
Page 17 and 18: Autarky: PPF (cont.) 17  Internat
Page 19 and 20: Autarky: PPF (cont.) International
Page 21 and 22: Autarky: Prices and wages Internati
Page 23 and 24: Autarky: Pattern of production (con
Page 25 and 26: Autarky: Equilibrium prices Interna
Page 27 and 28: Autarky: Equilibrium prices (cont.)
Page 29 and 30: Trade: Absolute advantage Internati
Page 31 and 32: Trade: Equilibrium prices (cont.) I
Page 33 and 34: Trade: Equilibrium prices (cont.) I
Page 35 and 36: Trade: Equilibrium prices (cont.) 3
Page 37 and 38: Trade: Equilibrium prices (cont.) 3
Page 39 and 40: Trade: Application I 39  Internat
Page 41 and 42: Trade: Application II (cont.) Inter
Page 43 and 44: Trade: Application II (cont.) The a
Page 45 and 46: Trade: Relative wages The observati
Page 47 and 48: Trade: Relative wages (cont.) Suppo
Page 49 and 50: Trade: Relative wages (cont.) Inter
Page 51 and 52: Trade: Relative wages (cont.) Labor
Page 53 and 54:
Trade: Gains from trade Internation
Page 55 and 56:
International Commercial Policy The
Page 57 and 58:
Trade: Gains from trade (cont.) Int
Page 59:
International Commercial Policy The
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Trade and Technology: The Ricardian Model - Faculty

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