The Mechanism of Comparative Advantage and Competitive Advantage: The Slope Model

Abstract

This paper constructs the slope model of the revolution between comparative advantage and competitive advantage in accordance with the logical guideline of point-line- side-system, which is also called “54321” model, Five elements are government, labor, organization, capital and technology and shorted for GLOKT. Four assumptions refer to scale economy, imperfect competition, product differentiation, coordination of supporting industry, which are shorts for SE-IC-PD-CSI. Three paths refer to those three classes from the comparative advantage to competitive advantage, in which P₁ refers to Class I of comparative advantage. PII refers to Class II and PIII refers to Class III. Two platforms can be described two slopes of the industry mountain, which are similar to the particular industry import goods to the developed counties or to the developing countries. The ecological system refers to the whole system added the time element and becomes a dynamic and actual process.