Trade, Productivity, Income, and Profit: The Comparative Advantage of Structural Axiomatic Analysis
25 Pages Posted: 12 Dec 2011 Last revised: 6 Jun 2015
Date Written: December 11, 2011
The classical case of comparative advantage is put into a new formal framework, that is, the behavioral axioms of standard economics are replaced by a set of structural axioms. This enables a comprehensive analysis that takes the effects on income and profit explicitly into account. The axioms in combination with the conditions of market clearing, budget balancing and initial zero profit determine all measurable variables objectively. It is the purpose of the present paper to formally restate the notion of comparative advantage and to ascertain whether this leads to a well-grounded new perspective on this time-honored doctrine.
Keywords: new framework of concepts, structure-centric, axiom set, consistency, comparative advantage, terms of trade, exchange rate, division of labor, factor immobility
JEL Classification: F10, F16, F31, F41
Suggested Citation: Suggested Citation