Disadvantaging Comparative Advantages: The Problem of Decreasing Returns

  • Kunibert Raffer


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.


Free Trade Comparative Advantage Technical Progress Excess Demand Excess Supply 
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© Development Studies Association 1994

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  • Kunibert Raffer

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