Absolute advantage


 

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Absolute advantage

The ability to produce a good at lower cost, in terms of real resources, than another country. In a Ricardian model, cost is in term of only labor. Absolute advantage is neither necessary nor sufficient for a country to export a good. See comparative advantage.

Absolute advantage

A person, company or country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another person, company or country.



Absolute advantage

Similar Matches

Net advantage of refunding

Net advantage of refunding

The net present value of the savings from a refunding.


Comparative advantage

Comparative advantage

The ability to produce a good at lower cost, relative to other goods, compared to another country. In a Ricardian model, comparison is of unit labor requirements; more generally it is of relative autarky prices. With perfect competition and undistorted markets, countries tend to export goods in which they have comparative advantage. See also absolute advantage. Due to Ricardo (1815).


Law of Comparative Advantage

Law of Comparative Advantage

The principle that, given the freedom to respond to market forces, countries will tend to export goods for which they have comparative advantage and import goods for which they have comparative disadvantage, and that they will experience gains from trade by doing so. Idea due to Ricardo (1815).


Dynamic comparative advantage

Dynamic comparative advantage

A changing pattern of comparative advantage over time due to changes in factor endowments or technology.


Kaleidoscope comparative advantage

Kaleidoscope comparative advantage

A variant of fragmentation due to Bhagwati and Dehejia (1994).


Further Suggestions

Advantage
Comparative advantage
Distribution Cost Advantage
Revealed comparative advantage
Location specific advantages
Production Cost Advantage
Net advantage to leasing
Locational advantage
Chain of comparative advantage
Competitive advantage
Net advantage to merging
Yield advantage
First mover advantage
Cost advantage


 
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