Breaks in the chain of comparative advantage |
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| Authors: | E Kwan Choi Henry Thompson |
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| Institution: | 1. Technische Universität Dresden, Germany;2. Nanjing Aeronautics and Astronautics University, China;3. University of Augsburg, Germany;4. Hong Kong Baptist University, Hong Kong |
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| Abstract: | The chain proposition of comparative advantage states that when factor prices differ between two countries producing many products with two factors, every export of the capital abundant country would be more capital intensive than any of its imports. The present note points out that an economy has the option to break the chain to reach full employment if its factor endowment is not spanned by the production cone of the more intensive products. |
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