Posts tagged Comparative advantage
Comparative advantage and specialisation
12 years ago
by Alister
in The basics
Comparative advantage is where one person – or country – is relatively more efficient at producing a good or service than another person or country. Given that this is filed in the Macroeconomics section, I’m going to be talking about countries from here.
If two countries specialise in goods that they have a comparative advantage in producing, both are likely to be better off. This is the case even where one country is better at producing both goods. Consider a theoretical example – the two countries are Australia and Japan, and the goods are TVs and cars. An example might help. (more…)
The last lament of a dying retailer
2I wanted to consider the issue of GST on online sales, as raised by Gerry Harvey recently. I think he’s wrong – at least at the moment. He’s engaging in rentseeking – or at least, trying to. It’s worth looking at what’s happening, and why. Harvey claims that parity of the Australina dollar with the US dollar hurts retailers in Australia, and that there is not a level playing field, as GST does not apply to sales with a value of less than $1,000. It’s worth noting that online retail sales are a relatively small part of total retail sales – about 3%, according to Assistant Treasurer Bill Shorten, and of those, 20-50% are from overseas.
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