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An Absolute Price Analysis about the Comparative Advantage Theory
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TitleAn Absolute Price Analysis about the Comparative Advantage Theory  
AuthorNie Dan  
OrganizationEast China Normal University ,International Finance And Risk Management Research Center 
Key WordsRicarto;Comparative Advantage;The European Bonds Crisis;Outward Development 
AbstractRicardo’s comparative advantage theory explains the comparative power of industry through comparative price, and is not easily understood, even some widely spread mistakes have been made among ordinary people. But in the authorities’ and the entrepreneurs’ eyes, the comparative power of export products comes from their dollar prices definitely, so that exchange rates battles are often putting on among countries who try to improve their exports, so the author translates the comparative price model of the comparative advantage theory into absolute price model, not only to make the theory more easily understood, but also to point out a neglected point in the theory, and illustrates how the country whose prices of all goods are absolutely expensive can manage to restore its actual comparative advantage through painful recession and adjustments among industries——the so-called “survive from the fire mechanism” .The mechanism is also used to analyze the reason for the current European Bonds Crisis. Furthermore, Ricardo’ big country -small country model’ is expanded to demonstrate how the marginal revenue of China’s outward development is decreasing, by realizing that the USA is actually a small country in the aspect of labor-intensive products.  
Serial NumberWP218 
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