There is no Pareto Optimal scenario that involves you making hamburgers or cat videos.
This makes sense, but made me confused about how the standard comparative advantage argument for trade, i.e., with two humans or two countries, works, and why it doesn’t run into the same kind of conclusion. Turns out the confusion is justified. This 2007 paper, A New Construction of Ricardian Trade Theory, claims that all prior models of comparative advantage had the following problems:
On the contrary, the
models so far analyzed had two crucial defects. (1) Inputs were restricted to labor as a
unique factor and no material inputs were admitted. This implied that intermediate goods
were excluded from any theoretical analysis of international trade. (2) Choice of
techniques was not admitted. This is what is necessary when one wants to analyze
technical change and development.
It’s usually available for free at the linked address, but apparently the server is down for maintenance. I didn’t save a copy but the message says the system will be back on Monday.
This makes sense, but made me confused about how the standard comparative advantage argument for trade, i.e., with two humans or two countries, works, and why it doesn’t run into the same kind of conclusion. Turns out the confusion is justified. This 2007 paper, A New Construction of Ricardian Trade Theory, claims that all prior models of comparative advantage had the following problems:
I wish the paper was available to read. Do you have a copy available?
It’s usually available for free at the linked address, but apparently the server is down for maintenance. I didn’t save a copy but the message says the system will be back on Monday.