An Elementary Theory of Comparative Advantage

By Arnaud Costinot. 2009

236 citations recorded by the source corpus.

Comparative advantage, whether driven by technology or factor endowment, is at the core of neoclassical trade theory. Using tools from the mathematics of complementarity, this paper offers a simple, yet unifying perspective on the fundamental forces that shape comparative advantage. The main results characterize sufficient conditions on factor productivity and factor supply to predict patterns of international specialization in a multi-factor generalization of the Ricardian model to which we refer as an "elementary neoclassical economy." These conditions, which hold for an arbitrarily large number of countries, goods, and factors, generalize and extend many results from the previous trade literature. They also offer new insights about the joint effects of technology and factor endowments on international specialization.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/6589f0e59fcdc68bc6453a5f26826ed1c6d32602

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Citations in the corpus

Trade, Quality Upgrading, and Input Linkages: Theory and Evidence from Colombia (2018, unknown): “q̃(ω) = log r(ω)− (1− σ) log p(ω)− [log r − (1− σ) log p] (19)”
Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence (2012, unknown): “The basic environment is the same as in Costinot (2009).”
Covariance Matrix Estimation under Total Positivity for Portfolio Selection* (2019, background): “Log-supermodularity has a long history in ecomomics, in particular in the context of complementarity and comparative statics [Top78, MR90, MS94, Top98, Ath02, Cos09].”
Matching and Inequality in the World Economy (2010, unknown): “19 We omit the counterparts to the Heckscher-Ohlin theorem because both Ohnsorge and Trefler (2007) and Costinot (2009) prove this result with arbitrarily many factors and tasks.”
The Quality-Complementarity Hypothesis: Theory and Evidence from Colombia (2009, background): “For a very useful discussion of log-supermodularity in a trade context, see Costinot (2008). (22)The assumption that entrepreneurial ability and input quality are substitutes in the production of output quality would lead to the prediction of a negative correlation between plant size and input price”
What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas (2012, background): “…long been perceived as hopelessly ad-hoc, can be performed 3Matsuyama (2005), Acemoglu, Antras, and Helpman (2007), Levchenko (2007), Vogel (2007), Costinot (2009), and Cuñat and Melitz (2010) explicitly model the impact of various institutional features e.g. labor market exibility, the quality…”
Engel's Law in the Global Economy: Demand‐Induced Patterns of Structural Change, Innovation, and Trade (2019, unknown): “Costinot (2009) and Costinot and Vogel (2010, 2015) are among the first to apply them in international trade. subject to scale economies, as it depends on the availability of differentiated inputs, which change through entry/exit of monopolistically competitive firms as well as through…”
The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (2017, unknown): “Grossman and Maggi (2000) and Costinot (2009) are particularly influential applications of these techniques in international trade environments.”
The comparative advantage of cities (2020, unknown): “Assumption 2 in Costinot (2009)’s factor-endowmentmodel is that countries' exogenous endowments are such that countries can be ranked according to themonotone likelihood ratio property.”