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The suggestion is that the more productive country would convert all of its production to one commodity, leaving an opportunity for other commodities to other c
by lambertsimnel 11y ago
The suggestion is that the more productive country would convert all of its production to one commodity, leaving an opportunity for other commodities to other countries. This is a bit simplistic, as it assumes that production can be converted, that there no region of the country where a different industry is more productive, that producers have the relevant information, etc.
- SapphireSun 11y agoWikipedia had an interesting segment on the general case where there are more than two industries: "In both Ricardian and H–O models, the comparative advantage concept is formulated for 2 country, 2 commodity case. It can easily be extended to the 2 country, many commodity case or many country, 2 commodity case.[17][18] But in the case with many countries (more than 3 countries) and many commodities (more than 3 commodities), the notion of comparative advantage requires a substantially more complex formulation.[19]"