A test of the law of comparative advantage, revisited

U.S. peanut, sugar, and tobacco tariff rate quotas (TRQs) are allocated to suppliers on an historical market share basis. Once allocated they become difficult to redistribute to accommodate changes in comparative advantage among suppliers. The distribution of trade departs increasingly from the tariff-equivalent distribution advocated by the WTO principle of nondiscrimination. Article ΧIII of the GATT regarding the rules for historical allocation is examined and applied to four cases of historical allocation: domestic tobacco quota and TRQs for peanuts, sugar and tobacco. The difference between the law enforcement objective of the WTO and the Pareto optimization objective assumed by economists is stressed throughout.

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Monopoly, the law of comparative advantage, and commodity price agreements: A simple general equilibrium analysis

Review of World Economics ◽

10.1007/bf02696947 ◽

1974 ◽

Vol 110 (2) ◽

pp. 259-287 ◽

Cited By ~ 4

Author(s):

Richard James Sweeney

Keyword(s):

General Equilibrium ◽

Comparative Advantage ◽

Commodity Price ◽

Equilibrium Analysis ◽

General Equilibrium Analysis ◽

The Law

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The General Validity of the Law of Comparative Advantage

Comparative Advantage, Growth, and the Gains from Trade and Globalization - World Scientific Studies in International Economics ◽

10.1142/9789814340373_0010 ◽

2011 ◽

pp. 73-90

Author(s):

Alan V. Deardorff

Keyword(s):

Comparative Advantage ◽

General Validity ◽

The Law

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The Astonishing Conclusion of the Attribution Debate on the Law of Comparative Advantage

10.31219/osf.io/uwdbk ◽

2021 ◽

Author(s):

Jorge Morales Meoqui

Keyword(s):

Comparative Advantage ◽

Numerical Example ◽

The Law

The recent demystification of David Ricardo’s famous numerical example in chapter 7 of the Principles bears important implications for the longstanding attribution debate on the law of comparative advantage. It has now become apparent that neither Ricardo nor Smith had anything to do with it. In reality, they both adhered to the classical rule for specialization, allegedly refuted by the law of comparative advantage. The unfounded belief in the existence of this so-called law gradually grew out of the confusion created by John Stuart Mill’s misreading of the purpose, content and implications of Ricardo’s four numbers. As shown in the paper, J. S. Mill, James Mill and Robert Torrens also always adhered to the classical rule for specialization. Thus, the law of comparative advantage is nothing more than an illusion, so no one should be credited for it.

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