From Don Boudreaux’s Everyday Economics:


Hat tip Marginal Revolution

What can a small, isolated island economy teach the rest of the world about the nature and causes of the wealth of nations? When Tasmania was cut off from mainland Australia, it experienced the miracle of growth in reverse, as the reduction in trade and human cooperation forced its inhabitants back to the most basic ways of living. In an economy with a greater number of participants trading goods and services, however, there are more ways to find a comparative advantage and earn more by creating the most value for others. Let’s join Bob and Ann as they teach us the “Story of Comparative Advantage” like you’ve never seen it before.

Category: Economy, Philosophy

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2 Responses to “Comparative Advantage: The Tragedy of Tasmania”

  1. [...] “http://www.ritholtz.com/blog/2014/07/comparative-advantage-the-tragedy-of-tasmania/” This entry was tagged Advantage, Comparative, Tasmania, Tragedy. Bookmark the [...]

  2. [...] The tragedy of Tasmania illustrates the concept of comparative advantage [...]

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