econ434notes9c

econ434notes9c - David Ricardo and his hypotheses on gains...

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David Ricardo and his hypotheses on gains from trade: 1) comparative static gains If society so desires, the winners from trade can bribe the losers so that everyone shares in the gains. For instance, car and construction industries could spend some of their profits to pay American steel workers $70k a year to sit on the couch and drink beer and still be better off than they were under policies that protected domestic steel. The workers still get their paychecks, and the other industries see an increased profit margin for the time being, and consumers can get a cheaper product (in this case cars and commercial buildings that need steel). 2) uniqueness Some goods are unavailable locally. For instance, a Caribbean nation is unlikely to be able to mine gold or some other mineral. Trade makes goods available that may not have previously have been purchasable by even the wealthiest in autarky. 3)
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This note was uploaded on 01/12/2010 for the course ECON 434 taught by Professor Byrns during the Spring '09 term at UNC.

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econ434notes9c - David Ricardo and his hypotheses on gains...

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