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Create a 12 page essay paper that discusses Bilateral Trade Agreements Master.We shall employ the economic analyses of infant industry argument and some game theories such as the Tragedy of the Common
Create a 12 page essay paper that discusses Bilateral Trade Agreements Master.
We shall employ the economic analyses of infant industry argument and some game theories such as the Tragedy of the Commons and the Prisoner's Dilemma to assess the effect of the possible trade between the two countries.
International trade traces its roots from the modern economic concepts popularized by economists such as David Ricardo.
Particularly, it has its foundation on the "principles of comparative advantage" which supports international trade (Mankiw).
Introduced by David Ricardo in 1817 through his book On the Principles of Political Economy and Taxation, comparative advantage posits that trade can create value for both countries even if one has the fewer resources in the production of all goods. Using the production possibilities frontier, Ricardo was able to prove this, achieving a significant breakthrough in the field of international economics.
Practically, Ricardo believes that given the situation, both countries can still gain by having the less efficient country specialize in the production and exportation of the commodity in which its absolute disadvantage is smallest and import the product in which it has its greatest absolute disadvantage. The commodity in which one country has the least absolute disadvantage can be thought of as one in which it has the comparative advantage.