Talk:Comparative advantage

message: The comparative advantage example at the start of this article is flawed.  It states the less productive country is making more shirts per hour 4 instead of 2), which allows the flawed reasoning that this less productive country can benefit by making more shirts and selling them to the more productive country.
It is possible this example can be replaced with a different example which is sound.
-Todd Bezenek (talk) 20:59, 19 June 2011 (UTC)
replies: text: Thanks! I just modified the numbers. You can edit the article yourself, of course, if it's still wrong or you see another way of improving it. —Ben Kovitz (talk) 01:52, 20 June 2011 (UTC)
thread_title:  The comparative advantage example is flawed. 

message: Nice summary. (Torrrens — now there’s a name that doesn’t crop up often!)  
I was surprised not to see any mention of John Stuart Mill’s extensions and refinements of Ricardo’s theory. Mark Blaug’s (classic) Economic Theory in Retrospect (4th ed.) devotes 4 pages to Mill’s development of “reciprocal demand” and “terms of trade” (pp. 204–208; the 1st is an important new theoretical tool, the 2nd a key result), complete with 2 offer curve diagrams!  (Unfortunately, as is often the case in Blaug, it’s not clear whether Mill actually used the graphical device of an offer curve himself, or whether Mill only described the concept and Blaug incorporated the graphical device. I doubt that Mill did draw anything like an offer curve himself — graphical analysis hadn’t yet become a significant part of those early pioneers’ tool kit.)  
Blaug also credits Mill with explicitly introducing transportation costs and how they affect the “ratios of exchange”.
According to Blaug, Mill used “German linen” and “English cloth” as his 2 illustrative commodities. That seems like an odd choice: 2 very similar commodities, vs. Ricardo’s classic English cloth vs. Portuguese wine.  But Blaug doesn’t explain why Mill did this; maybe Mill didn’t explain it, either.  (Pure speculation on my part: Mill may have wanted to illustrate that comparative advantage could even apply to specific commodities within broader categories  of such commodities, and not just to significantly different products like cloth and wine.)
--Jackftwist (talk) 20:03, 22 October 2012 (UTC)
thread_title:  John Stuart Mill’s contributions to the theory? 

message: Great article, thanks to all involved.  I am confused by the follow, and thought it might be incorrect:
 " it then costs Britain 115 units of labor to obtain wine by trade – 100 units for producing the cloth, 15 units for importing the wine, which is more expensive than producing the wine locally,"
Doesn't the little chart preceding indicate Britain's wine Cost at 120?  It seems that even the higher trade costs of 15 still allow for some advantage to Britain in trade, although I agree that trade stops, because Portugal now has no advantage (cloth by trade for wine now costs 80+15 which is greater than the 90 to produce locally).  — Preceding unsigned comment added by 24.56.125.68 (talk) 13:20, 21 January 2013 (UTC)
thread_title:  Possible flaw in the Trade Costs article 

message: I have removed the statement suggesting, actually stating that "comparative advantage" is a law, which it is not nor has ever been. It has apparently been widely replaced by several sources (all it appears identified by anonymous IP addresses) in various articles and comment referrals throughout Wikipedia with the phrase, "law of comparative advantage", which makes it both original research and quite wrong... I have changed it accordingly. Stevenmitchell (talk) 08:36, 11 March 2013 (UTC)
thread_title: Comparative Advantage is not a law

message: The article needs to feature more criticism.  There has been much criticism of the concept by scholars over the years and it is a shame that the article fails to mention any of it.  One excellent treatment of the topic is featured in "Trade, Development and Foreign Debt" by Michael Hudson
Vilhelmo (talk) 06:37, 28 April 2013 (UTC)
replies: text: Ha-Joon Chang has published several books that are reliable sources. Your feelings are not wikipedia policy. Furthermore, the first statement of the article today is wrong. Comparative advantage is both a descriptive theory - for explaining the patterns of trade - and a normative theory. The article might mention the Leontief paradox - I have not read it closely - and more recent work validating it. Leontief showed that a naive theory of comparative advantage is empirically wrong. Alternative theories for explaining the patterns international trade include the Keynesian theories of Joan Robinson and Harry Johnson - they would have been irritated to be grouped together like that, maybe - and Krugman's work on increasing returns. As for normative claims, Ian Steedman and others showed decades ago that economies have negative gains - that is, losses - from trade when specializing under the theory of comparative advantage, given constant returns, etc.; produced capital goods, and a positive interest research. Others have built on this work in reliable sources since then too. 209.217.213.202 (talk) 22:55, 13 August 2014 (UTC)
thread_title:  Criticism? 

message: The first sentence of this article, "In economics, comparative advantage refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another" is incorrect.  That is exactly what comparative advantage does not refer to.  This is advantage, not comparative advantage, and of course all products have different marginal or opportunity costs.
The confusion of the two, advantage and comparative advantage, is the reason why the doctrine of comparative advantage is said to be the only thing in classical economics which is not intuitively obvious.  The writer is perhaps confused by thinking about two goods, but the minimal model involves two producers of those goods, two payment regimes with different currencies, and the terms of trade between those producers.
 
For a moment the second sentence staggers in the right direction.  The author does not seem to realize that the second sentence does not amplify the first, it propounds a different idea.
The second paragraph, explicating the second sentence, is hand-waving more or less in the right direction. It is meaningless without the point that the "two nations" sensibly referred to must have different currencies with which to equilibrate their own payments of their own shirt and shoe makers.
 
Here's what's important:  the word "comparative" is not in there just for fun; the essence is not being better at something, but being more better or less worse at making A than B.  You sell A, even to somebody who can make easier than you, and you buy B, because they are more better or less worse at B.  
Michael Jordan plays better basketball than pretty much anybody, but he would also be better than almost anybody else at mowing lawns; nevertheless he pays other people to mow his lawn.  Comparative advantage: basketball.  I have a comparative advantage over Michael Jordan in mowing his lawn over playing basketball anywhere any time.  Two actors, me and Jordan; two products, lawn mowing and professional basketball.
Then the next section, "Origins of the Theory," veers back into error.  It confuses an accurate statement by Smith, about advantage, with the actual doctrine of comparative advantage, formulated by, and generally credited to, David Ricardo.  The first is not an instance of the second.  They are different things.
 
This article should be scrapped.  The whole thing should be started over from scratch.  As it stands the article is just wrong.  It propagates a commonly held misconception, and thus increases the sum of human ignorance. 
David Lloyd-Jones (talk) 00:46, 4 August 2014 (UTC)
thread_title:  Scrap This Article.  It is Wrong, Mumble Failing to Correct the Popular Misconception. 

message: I've undone  which changed the piped link for "Ricardo-Viner" per WP:SPECIFICLINK. "Ricardo-Viner" is red linked which indicates to other editors that no Wikipedia article currently exist for this topic. It is possible that another editor will see this and decide to create such an article. In that case, all they have to do is click on the red link and it will take them to a where they can start working on the article. However, if the piped link is changed to "Specific Factors Model", clicking on the red link will take you to a page to create that article instead. Such a change is not an improvement and not a very intuitive use of pipe links as explained in WP:EASTEREGG. If the purpose of this edit was to create a red link for "specific factors", then this should have been done by "specific factors" instead which would give "specific factors". - Marchjuly (talk) 13:26, 18 August 2014 (UTC)
thread_title:  "Ricardo-Viner" wikilink 

message: Arnaud Costinot gave the proof(An Elementary Theory of Comparative Advantage) in situation of infinite countries and goods, but not mentioned in the article page. --27.16.130.233 (talk) 07:49, 20 November 2015 (UTC)
thread_title:   didn't mentioned the work by Arnaud Costinot  

message: Y. Shiozawa is a valid and useful reliable source for information on this topic. While a recent addition of his work to the article was reverted, the rationale ("plugging a single researcher with no proper references") for reverting was weak – mainly because the references can be improved. So, I recommend improvement via links and a WP:SUMMARY STYLE re-write. Here is a link for help.  – S. Rich (talk) 12:10, 5 May 2016 (UTC)
thread_title:  Yoshinori Shiozawa material 

message: The confusion between advantage and comparative advantage is widespread and dangerous.
 
This article wanders aimlessly around in the general area of both topics.  It fails to identify them both, and it fails to make the difference clear. 
 
Since this difference is important to public policy, this article should be scrapped and replaced. Altogether.  The whole thing.
 
In the short term a simple stub pointing people to the original Ricardo would seem to me the best way to go.  Is there a Wiki-competent person who could do that?
 
There is a good statement of the issues and of Ricardo's findings at http://internationalecon.com/Trade/Tch40/T40-0.php
 
Ricardo is like Einstein and Darwin in that he is a clear thinker, and hence is able to be a good writer. I haven't found his text online yet.  Does anybody know where there's a copy?
 
The Wiki entry at https://en.wikipedia.org/wiki/David_Ricardo is perfectly competent -- and I have the impression that it took a good deal of fighting to get it that way.  Well-intentioned half-wits seem to be pretty thick on the ground on this issue.
 
This is important: President Trump has appointed two senior advisors who are every bit as dangerous as Alex Jones or Pat Robertson.  When it comes to economics, trade, and Ricardo this is a matter of science -- of both rational thinking and empirical observation -- not of opinion.
 
To repeat: this article is not helping.  It needs to be taken down and replaced.  A blank stub, pointing people to the Wiki on Ricardo and to his actual work would be a huge improvement on this ver-ree mediocre piece of work.
 
David Lloyd-Jones (talk) 21:44, 19 November 2017 (UTC)
thread_title:  Wildly Inappropriate Wikipedia Entry 

message: The penultimate sentence of this section is somewhat confusing.  I wonder if it has been vandalised.  I have gone back to Ricardo's original text, but cannot quickly find what the correct wording might be.  (His formulation is just a little different).  It may be that the section would be clearer if this sentence were to be removed completely.  The rest of the section seems quite clear and revealing of Ricardo's analysis.  I will continue to ponder over what it is trying to say for the moment rather than being bold and deleting it.  Quartic (talk) 12:14, 16 April 2018 (UTC)
thread_title:  Comparative Advantage 

message: It is generally understood on here that the inclusion of criticism sections in articles should be done sparingly, if at all. That means that there is an exceptionally high bar to clear when you want to include a critique of a concept that attracts near-universal mainstream support (in this case, among economists). And I'm afraid citing a few fringe trade models doesn't warrant inclusion in this article, let alone an entire criticism section that uses language like "gained an audience among economists" -this is nonsense, and misleading to readers.
There is also another issue in the lead that might be worth clearing up (see previous talk section):
"(albeit with the assumption that the capital and labour do not move internationally)"
It's true that Ricardo assumed this, but Ricardo assumed a lot of things that have since been revised, extended or even discarded by modern economists. The same could be said of Newton, Darwin and most (if not all) scientific thinkers of the past.
But economists haven't rejected the Ricardian model altogether; far from it, they've actually expanded this concept to cover a wider range of phenomena, and adjusted it in the face of new empirical realities, as scientists tend to do. Ricardo had no idea that his theory would be used so extensively and in so many different applications, or that it would have predictive ability..
Economists no longer think of CA in two-dimensional terms, as part of a simplistic model of trade between individual countries and products (eg -the two-countries, two-commodities theory). CA now operates within the same product on global supply chains. In this sense we would say that the US has a 'comparative advantage' in inventing i-phone technology, while China has a comparative advantage in i-phone assembly -same product, different ends of the supply chain. It is no longer true that countries credited with exporting a product have produced these goods themselves -intra-product comparative advantage now explains about 2/3rds of global trade. 
This can and should be mentioned in the article, in place of the criticism section. The statement quoted above can then be removed from the lead and used to introduce this new section (start by mentioning the limitations in the classical Ricardian model, and then describe how the model has developed over time -sources are available). Jonathan f1 (talk) 01:43, 10 February 2023 (UTC)
thread_title:  neutrality and criticism