Gains from Trade Increase with Greater Differences in Opportunity Cost: A Classroom Experiment
摘要
This paper presents a classroom game about comparative advantage that demonstrates that gains from trade increase with the heterogeneity of opportunity costs between trading partners. Students allocate their labor endowment toward the production of two types of candy in three rounds. In the first round, students produce and consume candies under autarky. In the second round, students can trade. In the final round, each group becomes absolutely better at producing the good for which they have a comparative advantage and absolutely worse at producing the good for which they have a comparative disadvantage. The consumption of an abundance of goods in this final stage after trade provides a powerful lesson that greater differences in opportunity costs lead to larger gains from trade.