Comparative Advantage

Principle that trade benefits a party even when it is less efficient at everything, if opportunity costs differ.

Specifications & Metrics

type

International economics

introduced

1817

originator

David Ricardo

Core Principles & Analysis

• Ricardo's On the Principles of Political Economy and Taxation (1817) used England and Portugal trading cloth and wine.
• Specialization by lowest opportunity cost raises total output across trading partners.
• It remains the core argument for open trade in every trade textbook since.

Sources

• Econlib: Comparative Advantage