An Experimental Investigation Of The Law Of Comparative Advantage

Using experimental economics meathod,this paper report an experiment to test the law of Comparative Advantage through constructing a laboratory economy with prominent features of theoretic content and incorporating human subjests play in it.The experiment includes two environments according to different theory backgrounds: environment 1 designed in light of comparative cost theory;environment 2 designed in accordance with factor endowment theory.We got 6 basic conclusions:first,both Ricardo model on behalf of comparative cost theory and H-O model on behalf of factor endowment theory can not forcast experimental data accurately;second,the pattern of trade predicted by the law of Comparative Advantage is observed;third,production pattern move in the direction of theoretic equilibrium under free trade;fourth,tarrif reduce international trade and decrease the benefit between two countries;fifth,there are great gap between the actual output price and model equilibrium outcome;sixth, factor price are below marginal revenue products and input/output price ratios are below marginal products,but Factor price equalization can be observed within our experiment. On basis of these six basic conclusions,we conclude that the law of comparative advantage are observed in this experiment.This paper includes 5 charpters,its frame accords to "questions—theories reviews—experiments design and operate—data analysis and conclusions—summary and expectations".Charpter one is introduction with the research objects and significance;Charpter two includes retrospects and reviews about relevant literatures; Charpter three gives a detailed layouts of experiment design and operation;Charpter four gives a econometric analysis and statistics test for experimental datas;The last charpter is the summary of this paper and expectations on future study.