In this experiment, each participant is assigned
a role as a large or small producer of two products.
The large producer has an absolute
advantage in both products, but each person
has a comparative advantage in one of the products.
In the absence of trade, each person is limited in the number of balanced
combinations of the two goods ("ComBos") that can be produced,
and the (partial) specialization that results from trade increases the
number of ComBos that each is able to consume. The trade quantity is determined by
the minimum of the two participants' trade offers. Coordination of production
specialization is facilitated by allowing producers to communicate in advance.
In large classes, the experiment can be run in asynchronous mode "after hours."
Copyright 2009, Charles Holt, Please report problems and suggestions:
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Gains from Trade
Vecon Lab - February 18, 2019