Abstract
The aim of this chapter is a critical assessment of the Ricardian model and its usefulness in research. It starts with explaining the analytical difficulties by which the two-by-two model is characterized in comparison to an endowment model. Further, it is examined why it is challenging to add further dimensions and extend the basic example to a three-by-three case. Three possible solutions of the challenges related to many-good and many-country cases are discussed. Firstly, understand the possible efficient outcomes of these cases based on Jones (The Review of Economic Studies 28(3):161–175, 1961). Secondly, introduce the many-good-continuum model of Dornbusch, Fischer and Samuelson (The American Economic Review 67(5):823–839, 1977). Thirdly, find an empirical approach such as Eaton and Kortum (Econometrica 70(5):1741–1779, 2002).
Note: This chapter is based on a transcription of the presentation given at the Conference “Celebrating 200 Years of Ricardian Trade Theory” on May 12, 2017, at the University of Basel, Switzerland. It is a comment to the paper by Ronald W. Jones, i.e., to Chap. 6 of this book.
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Notes
- 1.
See, for example, Jones (1975).
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Taylor, M.S. (2017). Comments on the “The Main Contribution of the Ricardian Trade Theory” by Ronald W. Jones. In: Jones, R., Weder, R. (eds) 200 Years of Ricardian Trade Theory. Springer, Cham. https://doi.org/10.1007/978-3-319-60606-4_7
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DOI: https://doi.org/10.1007/978-3-319-60606-4_7
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