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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<strong>Trade</strong>: Relative wages (cont.)<br />
International Commercial Policy<br />
<strong>The</strong> <strong>Ricardian</strong> <strong>Model</strong><br />
Because foreign workers have a wage that is only 1/3<br />
the wage of domestic workers, they are able to attain a<br />
cost advantage (in wine production), despite low<br />
productivity.<br />
Because domestic workers have a productivity that is 6<br />
times that of foreign workers (in cheese production),<br />
they are able to attain a cost advantage, despite<br />
high wages.<br />
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