Ricardian Model Explained | International Trade Theory - Home Country Analysis (Part 1)
This lecture introduces the Ricardian Model of international trade, the foundational framework explaining how technological differences between countries create opportunities for trade and mutual gains. Learn the core assumptions of this classic 2x2x1 model (2 countries, 2 goods, 1 factor of production) and understand why comparative advantage drives international specialization.
Notes: https://nishamalhotra.com/trade-polic...
📌 What You'll Learn:
• The structure of the Ricardian model as a 2×2×1 trade framework
• Why is labour the only factor of production in this model
• Key assumptions: full employment, fixed labour supply, and labour mobility across sectors
• How technology differences between countries create the basis for trade
• Perfect competition assumptions and their role in the model
• Foundation for understanding comparative advantage and gains from trade
⏱️ Chapters:
No chapters available for this video.
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Keywords: Ricardian model, comparative advantage, labour productivity, technology differences, unit labour requirement, gains from trade,