Disadvantaging Comparative Advantages: The Problem of Decreasing Returns

Abstract

The effects of increasing returns to scale have been discussed for quite some time by economists focusing on trade theory. By contrast, the case of decreasing returns has not received much attention so far. Even though this latter case was classified as posing little analytical difficulty by Jones and Neary (1984, p. 48), it is of particular interest because absolutely rational specialisation according to (static) comparative costs may finally result in immiserisation and decreased (global) output. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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