Talk:Comparative advantage

The Heckscher-Ohlin model

It doesn't seem right to mention the Hecksher-Ohlin model without noting that the United States (the world's most capital-intensive country) was since found to be exporting labour-intensive products and importing capital-intensive products. Since it seems to be generally accepted nowadays that factor endowments have no more than a minor influence upon trade patterns, is it worth mentioning Hecksher-Ohlin at all? Nick Gardner 10:34, 13 November 2007 (CST)

I think we need to mention the H-O-S model as something which is now looking rather irrelevant or even wrong. This is because many courses still teach it, and people will ask why it is not discussed here...--Martin Baldwin-Edwards 11:29, 13 November 2007 (CST)

A proposal to give the article a revised structure.

This seems unnecessarily diffuse as it stands, and some could misinterpret it as suggesting that the law is a model rather than a logical statement.

I suggest that it should start by a statement and explanation of the law on the following lines:

The law of comparative advantage states that, even if one of two producers had an absolute advantage over the other in every type of activity, both will benefit if each concentrates upon what he does best and exchanges the product with the other . For example it would pay a writer of best-sellers who was better at plumbing than any of the available plumbers, to stick to his writing and hire a plumber. What is true of skill differences is true also of other advantages, such as the possession of better tools or access to more advanced technology. It was first formulated in terms of differences between countries, and John Stuart Mill illustrated it in terms of the trade in cloth and wine between Britain and Portugal;

- followed first by an arithmetical demonstration of its logical necessity, then by a reference to the H-O factor endowment model (and the evidence to the contrary), and finally by a reference to its use by economists to counter logically invalid "level playing field" arguments for trade restrictions. Nick Gardner 11:30, 16 November 2007 (CST)

The article is defective in other respects. The statement that the law of comparative advantage depends upon assumed free competition and perfect information is wrong, and the absence of any discussion of the effects of capital mobility is a serious omission. Unless someone persuades me not to, I propose to scrap it and start again. Nick Gardner 16:24, 20 December 2007 (CST)