Strategic market games and Ricardo

Toraubally, W ORCID: https://orcid.org/0000-0002-2684-7360, 2017. Strategic market games and Ricardo. Economics Bulletin, 37 (4), pp. 2517-2525. ISSN 1545-2921

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Abstract

We develop a Ricardian market game to show that in non-Walrasian economies, the Law of Comparative Advantage (LCA) à la Ricardo-Haberler (1817; 1936) can fail. Trade is driven, not by comparative advantages, but by strategic behaviour. This leads to a new and somewhat surprising result: it is shown in a Ricardian economy that at equilibrium, by both exporting and importing goods in which they have a comparative disadvantage, countries can Pareto improve on when they specialise as per the LCA, which in turn Pareto dominates autarky.

Item Type:	Journal article
Publication Title:	Economics Bulletin
Creators:	Toraubally, W.
Publisher:	Economics Bulletin
Date:	19 November 2017
Volume:	37
Number:	4
ISSN:	1545-2921
Identifiers:	Number Type 1532042 Other
Rights:	Attribution 4.0 International (CC BY 4.0).
Divisions:	Schools > Nottingham Business School
Record created by:	Jonathan Gallacher
Date Added:	08 Apr 2022 15:36
Last Modified:	08 Apr 2022 15:36
URI:	https://irep.ntu.ac.uk/id/eprint/46081

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