Yes. The comment was meant as a proof by example that you can have no trade in a world with comparative advantages, if everyone has the same marginal value of all products the result is no trade. Diminishing marginal returns are indeed enough to make marginal values different between people.
Except, your example doesn’t have comparative advantages because there is only one “good” available (points). There has to be some difference in value somewhere to have different goods.
And note the slight of hand in the original post where Elizer goes from “people like all goods the same” to “oh, but somehow people like laptops more than apples”—if everyone really did like all things equally, there would be no trade because having “a basket of apples” would be the same as having “one apple.”
Yes. I agree that the original post keeps going after removing differences in values because they don’t remove differences in marginal value, which is what matters. I am providing an example where properly removing the differences in marginal value results in no trade.
You are using a nonstandard definition of goods. Would you equally object to a market with only blueberries, apples and bananas on the basis that there is only one good available (fruits)?
The example world can be modified easily to use any utility function of the form a·red points + b·yellow points + c·blue points.
The whole point of making simplified models (economic or otherwise) is to reflect some underlying truth in a more grokkable form. But, if you remove the load bearing ideas when making the model it doesn’t provide any insight.
If all goods are perfect substitutes, then there is no trade. That’s all your model is saying. And that’s the same thing I was saying, though my previous post was less elegant about it. It doesn’t matter what the production functions look like: they key factor is the perfect substituiton on the demand side. And, as you said, redefining a Red point as 1/a Red points doesn’t change that conclusion.
Yes.
The comment was meant as a proof by example that you can have no trade in a world with comparative advantages, if everyone has the same marginal value of all products the result is no trade.
Diminishing marginal returns are indeed enough to make marginal values different between people.
Except, your example doesn’t have comparative advantages because there is only one “good” available (points). There has to be some difference in value somewhere to have different goods.
And note the slight of hand in the original post where Elizer goes from “people like all goods the same” to “oh, but somehow people like laptops more than apples”—if everyone really did like all things equally, there would be no trade because having “a basket of apples” would be the same as having “one apple.”
Yes.
I agree that the original post keeps going after removing differences in values because they don’t remove differences in marginal value, which is what matters.
I am providing an example where properly removing the differences in marginal value results in no trade.
You are using a nonstandard definition of goods. Would you equally object to a market with only blueberries, apples and bananas on the basis that there is only one good available (fruits)?
The example world can be modified easily to use any utility function of the form a·red points + b·yellow points + c·blue points.
The whole point of making simplified models (economic or otherwise) is to reflect some underlying truth in a more grokkable form. But, if you remove the load bearing ideas when making the model it doesn’t provide any insight.
If all goods are perfect substitutes, then there is no trade. That’s all your model is saying. And that’s the same thing I was saying, though my previous post was less elegant about it. It doesn’t matter what the production functions look like: they key factor is the perfect substituiton on the demand side. And, as you said, redefining a Red point as 1/a Red points doesn’t change that conclusion.