The Law of Comparative Advantage Without Social Utility Functions
REVIEW OF INTERNATIONAL ECONOMICS
Posted: 7 Mar 1997
Abstract
This paper derives sufficient conditions under which the Law of Comparative Advantage and the General Law of Comparative Advantage are true when the preferences of the trading countries may not be represented by "well-behaved" social utility functions. It shows that in the neoclassical framework with convex technologies, profit maximization and Walras's Law, the laws of comparative advantage under anatural trade are still valid if either the General Law of Demand or the Weak Axiom of Revealed Preference holds, or if losers are compensated using lump-sum transfers or consumption taxes.
JEL Classification: F1
Suggested Citation: Suggested Citation
Shimomura, Koji and Wong, Kar-yiu, The Law of Comparative Advantage Without Social Utility Functions. REVIEW OF INTERNATIONAL ECONOMICS, Available at SSRN: https://ssrn.com/abstract=4715
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