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journal article An Experimental Investigation of the Patterns of International TradeThe American Economic Review Vol. 85, No. 3 (Jun., 1995) , pp. 462-491 (30 pages) Published By: American Economic Association https://www.jstor.org/stable/2118183 Read and download Log in through your school or library Alternate access options For independent researchers Subscribe to JPASS Unlimited reading + 10 downloads Purchase article $10.00 - Download now and later Monthly Plan
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Abstract This paper studies a laboratory economy with some of the prominent features of an international economic system. The patterns of trade and output predicted by the law of comparative advantage are observed evolving within the experimental markets. Market prices and quantities move in the direction of the competitive equilibrium, but the quantitative predictions of the (risk-neutral) competitive equilibrium are rejected. Considerable amounts of economic activity occur as disequilibria. Factor-price equalization is observed, but there is a universal tendency for factors of production to trade at prices below their marginal products. Journal Information The American Economic Review is a general-interest economics journal. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession and is celebrating over 100 years of publishing. The journal publishes 11 issues containing articles on a broad range of topics. Publisher Information Once composed primarily of college and university professors in economics, the American Economic Association (AEA) now attracts 20,000+ members from academe, business, government, and consulting groups within diverse disciplines from multi-cultural backgrounds. All are professionals or graduate-level students dedicated to economics research and teaching. Rights & Usage This item is part of a JSTOR Collection. Does Porter's model of competitive advantage predict the pattern of international trade that we observe in the real world?Does Porter's model of competitive advantage predict the pattern of international trade that we observe in the real world? No. Porter's model has not been subjected to detailed empirical testing.
What are the main contributions of Porter's theory of competitive advantage?Michael Porter proposed the theory of competitive advantage in 1985. The competitive advantage theory suggests that states and businesses should pursue policies that create high-quality goods to sell at high prices in the market. Porter emphasizes productivity growth as the focus of national strategies.
How does Porter's Diamond model work in global market explain?Porter Diamond Model is an economic theory that explains why some companies or nations enjoy a competitive edge in an area. It helps businesses identify the factors that can improve their performance. The model contends that the regional competitive advantage translates to an international advantage in foreign markets.
Is Porter's Diamond framework a new theory that explains the international competitiveness of countries?The purpose of this article is to explain why Porter's Diamond Framework is not a new theory that explains the competitiveness of countries but rather a framework that enhances our understanding of the international competitiveness of firms. Copyright on articles is retained by the author(s).
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Does Porters model of competitive advantage predict the pattern of international trade that we observe in the real world?
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