Strategic market games and Ricardo

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

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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
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

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