Using a two-sector one-factor comparative-advantage-based trade model un- der uncertainty, we show that: 1) to specialize according to comparative advan- tages may be sub-optimal in a multi-period setting; 2) there are conditions under which, even if agents are risk-neutral, the decentralized solution is inefficient and characterized by overspecialization.
Uncertainty and the optimal level of specialization
VALENTE, MARCO
2012-01-01
Abstract
Using a two-sector one-factor comparative-advantage-based trade model un- der uncertainty, we show that: 1) to specialize according to comparative advan- tages may be sub-optimal in a multi-period setting; 2) there are conditions under which, even if agents are risk-neutral, the decentralized solution is inefficient and characterized by overspecialization.File in questo prodotto:
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