Glossary · Micro · Macro · Efficiency and trade

Specialization and gains from trade

Each producer focusing on its comparative-advantage good and trading for the rest. Total output rises, so both sides can end up with more than they could make alone. The extra is the gains from trade.

Also called: gains from trade

Taught in: Specialization & Trade

Related terms

Comparative advantageTerms of tradeAutarky

More from efficiency and trade

Absolute advantageContract curve and the coreEdgeworth boxFirst welfare theoremPareto efficiencyPartial vs general equilibrium

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