Comparative Advantage and International Trade

Posted on Saturday, January 31, 2009

Comparative advantage exists when a country has a margin of superiority in the production of a good or service i.e. where the opportunity cost of production is lower.

The basic theory of comparative advantage was developed by David Ricardo. Ricardo’s theory of comparative advantage was further developed by Heckscher, Ohlin and Samuelson.

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Comparative Advantage and International Trade