I explore the interactions between comparative, competitive and absolute advantage in a two-country model of oligopoly in general equilibrium. Comparative advantage always determines the direction of trade, but both competitive and absolute advantage affect resource allocation, trade patterns and trade volumes. Competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive. Absolute advantage in the se...Expand abstract
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- Peer reviewed
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- Blackwell Publishing Ltd.
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- N.B. Professor Neary was based at University College Dublin, and the Centre for Economic Policy Research, London when this article was first published. The full-text of this article is not available in ORA at this time. Citation: Neary, J. P. (2003). 'Competitive versus comparative advantage', The World Economy, 26(4), 457-470. [The definitive version is available at www.blackwell-synergy.com].
Competitive versus comparative advantage
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