Using a two-sector one-factor comparative-advantage-based trade model under uncertainty, we show that (1) to specialize according to comparative advantages 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.

Uncertatinty and the Optimal Level of Specialization

DI MAIO, Michele;
2012

Abstract

Using a two-sector one-factor comparative-advantage-based trade model under uncertainty, we show that (1) to specialize according to comparative advantages 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.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11367/18004
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