Comparative Advantages and Possible Coordination Failure: An Explanatory Note

Most trade models today are specializations of, or variations on, the general‐equilibrium model of Arrow–Debreu–McKenzie, where no one's action is conditioned on others' previous action. Although that model does not deal with free riding, trade literature has achieved much for a world unde...

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Bibliographic Details
Published inReview of international economics Vol. 17; no. 2; pp. 280 - 291
Main Authors Tung, An-Chi, Wan, Jr, Henry
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.05.2009
Wiley Blackwell
SeriesReview of International Economics
Subjects
Asia
Comparative advantage
Competitive advantage
Economic models
Economic statistics
Economic theory
Game theory
High technology
Industrial policy
International trade
Studies
Trade policy
South Korea
Singapore
Asia
Taiwan
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Summary:Most trade models today are specializations of, or variations on, the general‐equilibrium model of Arrow–Debreu–McKenzie, where no one's action is conditioned on others' previous action. Although that model does not deal with free riding, trade literature has achieved much for a world under stable environment. Evidence from Asian high‐tech sectors and findings of dynamic games argue for an augmented analysis of world trade, involving new goods, new suppliers, and rapidly changing technology. Here comparative advantage depends on industrial policy to control free riding, encourage pioneers and launch industries. Distinctly different industrial policies shape international specialization among the nations.
Bibliography:This paper is inspired by, and dedicated to, the fruitful and unfortunately short career of Koji Shimomura, in identifying issues from empirical observations and then analyzing them with applicable theory. An example is the trade-habit nexus analyzed in Kemp et al. (2001). We are also grateful to the most valuable comments from Nancy Chau, Elias Dinopoulos, Earl Grinols, Murray Kemp, and T. N. Srinivasan, as well as an anonymous referee. The authors take responsibility for all the remaining shortcomings of this paper.
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This paper is inspired by, and dedicated to, the fruitful and unfortunately short career of Koji Shimomura, in identifying issues from empirical observations and then analyzing them with applicable theory. An example is the trade–habit nexus analyzed in
Kemp et al. (2001
We are also grateful to the most valuable comments from Nancy Chau, Elias Dinopoulos, Earl Grinols, Murray Kemp, and T. N. Srinivasan, as well as an anonymous referee. The authors take responsibility for all the remaining shortcomings of this paper.
ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0965-7576
1467-9396
DOI:10.1111/j.1467-9396.2009.00823.x