Abstract
We have seen in Sect. 2.3 that the theory of comparative costs can be given a modern formulation in terms of optimization (see, for example, Chipman, 1965; Dorfman, Samuelson, & Solow, 1958; Hartwick, 1979; Jones, 1961; McKenzie, 1954a,b, 1955; Takayama, 1972; Whitin, 1953).
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Notes
- 1.
The dual to problem (18.3) is Min w L subject to w l i  ≥ p i , w ≥ 0.
- 2.
It should be noted that if one is interested exclusively in the terms of trade, it is sufficient to divide the first equation of (18.48) by the second and to make use of Eq. (18.50), with no need to determine r 1 c and r 2 c: what matters for this purpose is, in fact, the given relation between the two profit rates, not their actual values.
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Gandolfo, G. (2014). Appendix to Chapter 2. In: International Trade Theory and Policy. Springer Texts in Business and Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-37314-5_18
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