Absolute and comparative advantage

Absolute and comparative advantage

Even if your productivity is absolutely inferior to that of the other party, you and the other party can improve each other's productivity by creating and offering to the other party what is relatively productive in yourselves and receiving in return what is relatively unproductive in yourselves.

The figure on the right, although easier to understand at first glance, represents the benefits of trade when there is an absolute advantage because of the exchange in terms of superiority over the other party.

Note that in this discussion, the trade object is considered to be an accumulable consumer good and the trade cost is considered to be zero. For example, there is no value in making more than demand if it cannot be accumulated. Knowledge is not a consumer good, so "teaching what you already know" does not produce value. If the profit from trade is less than the cost of trade, then, of course, it is better not to trade.

The strategy of how an absolutely inferior country can obtain absolute superiority is not discussed here.

__BELOW_IS_AI_GENERATED__

The note from "Blind Spot Cards Without Pictures Yet" discusses absolute advantage versus comparative advantage. He states that even if one's productivity is inferior to that of the other, it is possible for both parties to increase their productivity by creating and providing the other with relatively high productivity. He also notes that the objects of trade are consumer goods that can be accumulated and that the cost of trade is assumed to be zero. It does not mention strategies for absolute inferior countries to gain absolute advantage.

The fragment "replace to data" is relevant to the note. The concepts of absolute and comparative advantage described in the note are also applicable in the process of replacing physical wiring with data. In other words, even if one's productivity is inferior to that of the other party, both parties can improve their productivity by creating data with relatively high productivity and providing it to the other party.

deep thinking

A reading of this note and fragment suggests that the concepts of absolute and comparative advantage are also applicable in the process of replacing physical wiring with data. It should be noted, however, that in this discussion it is assumed that the object of trade is an accumulable consumer good and that the cost of trade is zero. Although strategies for absolute inferior countries to gain absolute advantage are not mentioned, this problem may exist in data displacement as well.

summary of thoughts

The concepts of absolute and comparative advantage are also applicable in the process of replacing physical wiring with data, but it should be noted that the object of trade is an accumulable consumer good and the cost of trade is assumed to be zero.

Applying Absolute and Comparative Advantage in Data Displacement."

extra info

generated: 2023-09-05 01:14

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