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Trade and Technology: The Ricardian Model - Faculty

Trade and Technology: The Ricardian Model - Faculty

Trade:

Trade: The pattern of trade International Commercial Policy The Ricardian Model Notice that the free trade relative price lies between both countries’ autarky relative prices. As a consequence, Home specializes fully in cheese production and Foreign specializes fully in wine production. Thus, each country exports the good in which it has a comparative advantage. Notice that it is immaterial for the pattern of trade whether or not Home has an absolute advantage in cheese or wine production. 38


Trade: Application I 39
 International Commercial Policy The Ricardian Model

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