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Absolute advantage |
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Absolute advantageThe 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 advantageA 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 MatchesNet advantage of refundingNet advantage of refundingThe net present value of the savings from a refunding. Comparative advantageComparative advantageThe 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 AdvantageLaw of Comparative AdvantageThe 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 advantageDynamic comparative advantageA changing pattern of comparative advantage over time due to changes in factor endowments or technology. Kaleidoscope comparative advantageKaleidoscope comparative advantageA variant of fragmentation due to Bhagwati and Dehejia (1994). Further SuggestionsAdvantageComparative 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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