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If you’re going to insist on proper jargon, you might want to refresh first. Comparative advantage [1] in X means you suffer a lower opportunity cost (forgone p
by SilasX 7y ago
If you’re going to insist on proper jargon, you might want to refresh first. Comparative advantage [1] in X means you suffer a lower opportunity cost (forgone profit from what you could have done) to produce X than others.
A canonical example would be the doctor who is a better secretary than their secretary (produces more value per hour, looking only at secretarial value). The secretary still has a comparative advantage in secretarial labor because they forgo $0 of doctor income to work that job, while the doctor would forgo $100/hour they could be earning as a doctor in order to work as a secretary.
This is true even though the doctor has an absolute (or competitive) advantage in secretarial work.
The real test for whether something is financially optimal is if you have a comparative, not absolute advantage.
Uber not having a competitive/absolute advantage in SDCs would also be a reason not to do it, because of the details of this case, but comparative advantage is correct as well, though perhaps an unnecessarily strong criterion for the point I needed to make.
[1] https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage
- perl4ever 7y ago"Comparative advantage [1] in X means you suffer a lower opportunity cost" Yes, however I don't see a relevant difference between that and my phrasing. It still looks to me as though you were clearly describing a lack of competitive advantage, while using the word comparative. Sure, you can discuss comparative advantage if you want.