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Roberts Again Replies to Boudreaux

January 18, 2004

When Boudreaux writes that comparative advantage does not result from different countries having different internal cost ratios or different opportunity costs of producing one good in terms of another, he puts himself at odds with international trade theory. As economists have known for two centuries, the opportunity cost of one good in terms of another depends on the factors of production. If the factors of production can pick up and leave for greener pastures abroad, the internal cost ratios that determine a country's comparative advantage are gone with the factors of production.


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