Comparative Advantage
The economic principle where an agent has an advantage over another when a particular good they can produce at a lower relative opportunity cost (i.e. at a lower relative marginal cost prior to trade) than their competitors.
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Origin
British economist David Ricardo introduced the theory in his 1817 On the Principles of Political Economy and Taxation, using the now-famous example of England trading cloth for Portuguese wine. Robert Torrens may have stated a version of the idea two years earlier in his 1815 Essay on the External Corn Trade, though Ricardo developed it more fully. The principle became the foundational argument for free trade in classical economics.
Updated February 22, 2026