1、CHAPTER 2,LABOR PRODUCTIVITY COMPARATIVE ADVANTAGE（比较优势） THE RICARDIAN MODEL（李嘉图模型）,2,Chapter Organization,Introduction The Concept of Comparative Advantage A One-Factor Economy Trade in a One-Factor World Comparative Advantage with Many Goods Adding Transport Costs and Nontraded Goods Summary,3,Cou
2、ntries engage in international trade for two basic reasons: They are different from each other in terms of climate, land, capital, labor, and technology. They try to achieve scale economies in production. The Ricardian model is based on technological differences across countries. These technological
3、 differences are reflected in differences in the productivity of labor.,Introduction,4,On Valentines Day the U.S. demand for roses is about 10 million roses.Growing roses in the U.S. in the winter is difficult. Heated greenhouses should be used. The costs for energy, capital, and labor are substanti
4、al.Resources for the production of roses could be used to produce other goods, say computers.,The Concept of Comparative Advantage,5,Opportunity Cost The opportunity cost of roses in terms of computers is the number of computers that could be produced with the same resources as a given number of ros
5、es.Comparative Advantage A country has a comparative advantage in producing a goods if the opportunity cost of producing that goods in terms of other goods is lower in that country than it is in other countries.,The Concept of Comparative Advantage,6,Suppose that in the U.S. 10 million roses can be
6、produced with the same resources as 100,000 computers.Suppose also that in South America 10 million roses can be produced with the same resources as 30,000 computers.This example assumes that South American workers are less productive than U.S. workers.,The Concept of Comparative Advantage,7,If each
7、 country specializes in the production of the goods with lower opportunity costs, trade can be beneficial for both countries. Roses have lower opportunity costs in South America. Computers have lower opportunity costs in the U.S.The benefits from trade can be seen by considering the changes in produ
8、ction of roses and computers in both countries.,The Concept of Comparative Advantage,8,Table 2-1: Hypothetical Changes in Production,The Concept of Comparative Advantage,The reason that international trade produces this increase in world output is that it allows each country to specialize in produci
9、ng the good in which it has a comparative advantage.,9,The example in Table 2-1 illustrates the principle of comparative advantage: If each country exports the goods in which it has comparative advantage (lower opportunity costs), then all countries can in principle gain from trade.What determines c
10、omparative advantage? Answering this question would help us understand how country differences determine the pattern of trade (which goods a country exports).,The Concept of Comparative Advantage,10,A One-Factor Economy,Assume that we are dealing with an economy (which we call Home). In this economy
11、: Labor is the only factor of production. Only two goods (say wine and cheese) are produced. The supply of labor is fixed in each country. The productivity of labor in each goods is fixed(技术水平不变). Perfect competition prevails in all markets（commodity market and factor market）. Factors can transfer f
12、reely between industries in a country but can not transfer between countries.,11,The technology of Homes economy can be summarized by labor productivity in each industry, expressed in terms of unit labor requirements: The unit labor requirement is the number of hours of labor required to produce one
13、 unit of output. Denote with aLW the unit labor requirement for wine (e.g. if aLW = 2, then one needs 2 hours of labor to produce one gallon of wine). Denote with aLC the unit labor requirement for cheese (e.g. if aLC = 1, then one needs 1 hour of labor to produce a pound of cheese). The economys to
14、tal resources are defined as L, the total labor supply (e.g. if L = 120, then this economy is endowed with 120 hours of labor or 120 workers).,A One-Factor Economy,12,Production Possibilities The production possibility frontier (PPF) of an economy shows the maximum amount of a goods (say wine) that
15、can be produced for any given amount of another (say cheese), and vice versa. Or illustrates the different mixes of goods the economy can produce. The PPF of our economy is given by the following equation:aLCQC + aLWQW = L (2-1)From our previous example, we get:QC + 2QW = 120,A One-Factor Economy,13
16、,L/aLW,L/aLC,Figure 2-1: Homes Production Possibility Frontier,A One-Factor Economy,o,14,Attention:the absolute value of slope has very import meaning for it equals opportunity cost of cheese in terms of wine(为了多生产一单位的奶酪所必须放弃的酒的产量),So the opportunity cost of cheese in terms of wine equals,15,Relativ
17、e Prices and Supply The particular amounts of each goods produced are determined by prices. The relative price of goods X (cheese) in terms of goods Y (wine) is the amount of goods Y (wine) that can be exchanged for one unit of goods X (cheese).,A One-Factor Economy,16,Example: If the price of a can
18、 of Coke is 0.5$, and the price of a can of beer is 1$, then the relative price of Coke in terms of beer is 0.5, that 0.5 can of beer can be exchanged for one unit of Coke.,17,Denote with PC the dollar price of cheese and with PW the dollar price of wine. Denote with wW the dollar wage in the wine i
19、ndustry and with wC the dollar wage in the cheese industry. There are no profits in our one-factor model,the hourly wage rate in the cheese sector will equal the value of what a worker can produce in an hour,PC/aLC.The hourly wage rate in the wine sector will be PW/aLW.,A One-Factor Economy,18,So, i
20、f, that is,the economy will specialize in the production of cheese, but if, that is,or,or,the economy will specialize in the production of wine,机会成本,19,Only when, will both goods be produced., that is,or,20,The above relations imply that if the relative price of cheese (PC / PW ) exceeds its opportu
21、nity cost (aLC / aLW), then the economy will specialize in the production of cheese. If the relative price of cheese (PC / PW ) equals its opportunity cost (aLC / aLW), both goods will be produced. In the absence of trade, both goods are produced, and therefore PC / PW = aLC /aLW.,A One-Factor Econo
22、my,21,Trade in a One-Factor World,Assumptions of the model: There are two countries in the world (Home and Foreign). Each of the two countries produces two goods (say wine and cheese). Labor is the only factor of production. The supply of labor is fixed in each country. The productivity of labor in
23、each goods is fixed. Labor is not mobile across the two countries. Perfect competition prevails in all markets. All variables with an asterisk refer to the Foreign country.,22,Absolute Advantage A country has an absolute advantage in a production of a goods if it has a lower unit labor requirement t
24、han the foreign country in this goods. Assume that aLC a*LW This assumption implies that Home has an absolute advantage in the production of cheese and the foreign has an absolute advantage in the production of wine. Another way to see this is to notice that Home is more productive in the production
25、 of cheese than Foreign. So the pattern of the assumption will be that home exports cheese and import wine.,Trade in a One-Factor World,23,分工前,分工后,24,现在放弃1个单位处于绝对劣势地位的部门生产，专业化分工后的净效果为：,国际分工后生产变化的净效果,25,But even if Home has an absolute advantage in both goods or in neither, beneficial trade is possib
26、le.The pattern of trade will be determined by the comparative advantage.,26,分工前,分工后,Example,27,Comparative Advantage Assume that aLC /aLW a*LC /a*LW (2-2) This assumption implies that the opportunity cost of cheese in terms of wine is lower in Home than it is in Foreign. In other words, in the absen
27、ce of trade, the relative price of cheese at Home is lower than the relative price of cheese at Foreign.Home has a comparative advantage in cheese and will export it to Foreign in exchange for wine.,Trade in a One-Factor World,28,L*/a*LW,L*/a*LC,+1,Figure 2-2: Foreigns Production Possibility Frontie
28、r,Trade in a One-Factor World,29,Determining the Relative Price After Trade What determines the relative price (e.g., PC / PW) after trade? To answer this question we have to define the relative supply and relative demand for cheese in the world as a whole. The relative supply of cheese equals the t
29、otal quantity of cheese supplied by both countries at each given relative price divided by the total quantity of wine supplied, (QC + Q*C )/(QW + Q*W). The relative demand of cheese in the world is a similar concept.,Trade in a One-Factor World,30,2,1,aLC/aLW,a*LC/a*LW,Figure 2-3: World Relative Sup
30、ply and Demand,Trade in a One-Factor World,31,Trade in a One-Factor World,First,the RS curve shows that there is no supply of cheese if the world price drops below aLC/aLW.-Assume aLC/aLWa*LC/a*LW, Home will specialize in the production of cheese.-Home will specialize in the production of wine whene
31、ver PC/PWaLC/aLW , or PC/aLCPW/aLW.-Similarly,Foreign will specialize in wine production whenever PC/PWa*LC/a*LW. Second,when the relative price of cheese, PC/PW=aLC/aLW, Home workers are indifferent between producing cheese and wine. We have a flat section of the supply curve.,32,Trade in a One-Fac
32、tor World,Third, aLC/aLWa*LC/a*LW, both Home and Foreign will specialize in cheese production. There will be no wine production, so that the relative supply of cheese will become infinite.,33,The Gains from Trade If countries specialize according to their comparative advantage, they all gain from th
33、is specialization and trade. We will demonstrate these gains from trade in two ways.,Trade in a One-Factor World,34,First, we can think of trade as a new way of producing goods and services (that is, a new technology). Home could produce wine directly, or produce cheese only and import wine from For
34、eign. Consider two alternative ways of using an hour of labor.,35,一单位的劳动在本国可以生产 单位的葡萄酒，但如果用这一单位的劳动生产奶酪，并用其从外国交换葡萄酒则可以获得单位的葡萄酒，而由于,因此有：,即获得了比自己生产更多的葡萄酒，贸易是 有利的,36,Another way to see the gains from trade is to consider how trade affects the consumption in each of the two countries. The consumption pos
35、sibility frontier states the maximum amount of consumption of a goods a country can obtain for any given amount of the other commodity. In the absence of trade, the consumption possibility curve is the same as the production possibility curve. Trade enlarges the consumption possibility for each of t
36、he two countries.,Trade in a One-Factor World,37,Trade in a One-Factor World,Figure 2-4: Trade Expands Consumption Possibilities,(a) Home,(b) Foreign,38,Gains from trade: consumption outside PPF,39,Setting Up the Model Both countries consume and are able to produce a large number, N, of different go
37、ods.Relative Wages and Specialization The pattern of trade will depend on the ratio of Home to Foreign wages. Goods will always be produced where it is cheapest to make them. For example, it will be cheaper to produce goods i in Home if waLi w/w*.,Comparative Advantage with Many Goods,40,Comparative
38、 Advantage with Many Goods,Table 2-4: Home and Foreign Unit Labor Requirements,41,Which country produces which goods? A country has a cost advantage in any good for which its relative productivity is higher than its relative wage. If, for example, w/w* = 3, Home will produce apples, bananas, and cav
39、iar, while Foreign will produce only dates and enchiladas. Both countries will gain from this specialization.,Comparative Advantage with Many Goods,42,Determining the Relative Wage in the Multigood Model To determine relative wages in a multigood economy we must look behind the relative demand for g
40、oods (i.e., the relative derived demand). The relative demand for Home labor depends negatively on the ratio of Home to Foreign wages.,Comparative Advantage with Many Goods,43,Comparative Advantage with Many Goods,Figure 2-5: Determination of Relative Wages,44,Adding Transport Costs and Nontraded Go
41、ods,There are three main reasons why specialization in the real international economy is not extreme: The existence of more than one factor of production. Countries sometimes protect industries from foreign competition.It is costly to transport goods and services. The result of introducing transport
42、 costs makes some goods nontraded. In some cases transportation is virtually impossible. Example: Services such as haircuts and auto repair cannot be traded internationally.,45,Summary,We examined the Ricardian model, the simplest model that shows how differences between countries give rise to trade
43、 and gains from trade.In this model, labor is the only factor of production and countries differ only in the productivity of labor in different industries.In the Ricardian model, a country will export that commodity in which it has comparative (as opposed to absolute) labor productivity advantage.,4
44、6,The fact that trade benefits a country can be shown in either of two ways: We can think of trade as an indirect method of production. We can show that trade enlarges a countrys consumption possibilities.The distribution of the gains from trade depends on the relative prices of the goods countries
45、produce.,Summary,47,Extending the one-factor, two-good model to a world of many commodities makes it possible to illustrate that transportation costs can give rise to the existence of nontraded goods.The basic prediction of the Ricardian model-that countries will tend to export goods in which they have relatively high productivity- has been confirmed by a number of studies.,Summary,
