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by jimmytidey 3708 days ago
Comparative advantage is just a model, as you rightly point out, I'm sure in any real world instance the situation is much more complicated.

However, its important to know that many economists believe its the foundational model on which further elaboration of trade policy should be built. That's why it's worth understanding.

1 comments

Yes, but my original point was that the foundational model isn't convincing at all to the layman. It can't stand on its own feet, and needs additional structure. Any decent model should come with caveats, and should specify the domain in which it's applicable.

Krugman was using the model to argue in favour of free trade. He'd be much better off arguing using historical examples if he wanted to be convincing.