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The General Validity of the Law of Comparative Advantage

Alan V. Deardorff
Journal of Political Economy
Vol. 88, No. 5 (Oct., 1980), pp. 941-957
Stable URL: http://www.jstor.org/stable/1833142
Page Count: 17
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The General Validity of the Law of Comparative Advantage
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Abstract

It is well known that the law of comparative advantage breaks down when applied to individual commodities or pairs of commodities in a many-commodity world. This paper shows that the law is nonetheless valid if restated in terms of averages across all commodities. Specifically, a theorem and several corollaries are derived which establish correlations between vectors of trade and vectors containing relative-autarky-price measures of comparative advantage. These results are proven in a general many-commodity model that allows for tariffs, transport costs, and other impediments to trade.

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