(DP 1989-02) A Note on an Antinony in Comparative Advantage

Abstract

This note points out that the pattern of trade predicted by the comparative advantage may or may not hold, depending on the initial distribution of endowments. A necessary and sufficient condition for the “perverse?case to occur in a pure-exchange economy is that the education in the value of consumption on the part of those who lose from trade exceed the increase in the value of consumption on the part of those who gain, where the evaluation is carried out at autarky prices. Examples are then presented which illustrate that the "antinomy" may occur even when there are only two goods and both are normal. The question then raised is whether the principles of comparative advantage can really be regarded as a purely positive proposition.