= 27d567bc2d48d9f40e9ccc20ea370b15)
thomblake comments on How I Became More Ambitious - Less Wrong
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (48)
That's just false. If A can make wool for $2 and coffee for $3, and B can make wool for $6 and coffee for $5, then B has a comparative advantage in coffee (which is in isolation a disadvantage) and A has a comparative advantage in wool (which in isolation is an advantage). Being a disadvantage just isn't necessary for a comparative advantage.
The critical piece necessary for trade to be profitable is that each party can produce a good at lower marginal and opportunity cost than the other party. I was thinking of just the absolute advantage case (like the example you gave and the example I gave) where one party's disadvantage becomes an advantage in the presence of trade, but I believe it's correct to refer to two parties which each have an absolute advantage as comparative advantage. I'm not sure about that, though.