Comparative Advantage and Digital Trade Alan V.

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Comparative Advantage and Digital Trade Alan V. Deardorff University of Michigan For presentation at International Trade, New Technologies and International Organization of Production ITSG Italian Trade Study Group, Politecnico di Milano

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01
Comparative Advantage and Digital Trade Alan V. Deardorff
University of Michigan For presentation at
International Trade, New Technologies and International Organization of Production
ITSG – Italian Trade Study Group, Politecnico di Milano
May 17, 2019<br>
02
The Law of Comparative Advantage Ricardo’s Law of Comparative Advantage
Formulated for a world where all trade was in goods, produced within countries, then transported between countries
Two purposes
To explain the pattern of trade
To illuminate the gains from trade 2<br>
03
The Law of Comparative Advantage Statement of the first purpose, to explain trade:
Trade if not distorted is based on countries’ relative costs of production
Since costs may change with trade, best understood with autarky costs (and autarky prices) 3<br>