Strategic Market Games and Ricardo

Waseem Toraubally

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
130 Downloads (Pure)


We develop a Ricardian market game to show that in non-Walrasian economies, the Law of Comparative Advantage (LCA) à la Ricardo-Haberler (1817; 1936) can fail. Trade is driven, not by comparative advantages, but by strategic behaviour. This leads to a new and somewhat surprising result: it is shown in a Ricardian economy that at equilibrium, by both exporting and importing goods in which they have a comparative disadvantage, countries can Pareto improve on when they specialise as per the LCA, which in turn Pareto dominates autarky.
Original languageEnglish
JournalEconomics Bulletin
Issue number4
Publication statusPublished - 19 Nov 2017

Bibliographical note

The Economic Bulletin is an open-access letters journal.


  • Shapley-Shubik Market Games
  • Endogenous commodity-price formation
  • Comparative Advantage
  • JEL: D5 - General Equilibrium and Disequilibrium: General
  • C7 - Game Theory and Bargaining Theory:General


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