Chapter 8 of 10All chapters
Chapter 8 of 10
Trade
Why countries exchange at all.
Comparative advantage
Specialising where your opportunity cost is lowest, then trading, can leave both sides better off even when one produces everything more efficiently.
- The aggregate gains are real and so are the concentrated losses.
- Displaced workers bear costs that the average figure hides entirely.
Barriers
Tariffs and quotas protect specific industries at a cost spread across all consumers. That asymmetry, concentrated benefit and diffuse cost, explains much of trade politics.