Meaning & use
comparative advantage
Last updated
Meanings
nouncountable or uncountablebusinessfinance
The ability of a country or firm to produce a good at a lower opportunity cost than others, so trade benefits both sides.
Grammar: Often used without 'a' in economic writing: countries gain from comparative advantage.
Patterns
- have a comparative advantage in something
- gain a comparative advantage over someone
- comparative advantage in producing something
The island has a comparative advantage in fishing because its waters are rich.
Economists argue that trade works when each country follows its comparative advantage.
Even a country that makes everything less efficiently can still benefit from comparative advantage.
nouncountable
Any feature or situation that makes one person or group more likely to succeed than another.
Grammar: Used more loosely in everyday business talk, often with 'a': a comparative advantage over rivals.
Patterns
- give someone a comparative advantage
- have a comparative advantage over someone
Speaking three languages gives her a comparative advantage in the job market.
The team's early start gave them a comparative advantage over their rivals.
Word forms
| plural | comparative advantages |
|---|
Common combinations
- have a comparative advantage in
- The region has a comparative advantage in wine production.
- gain a comparative advantage
- Better roads helped the port gain a comparative advantage.
- theory of comparative advantage
- The theory of comparative advantage explains why nations trade.
- comparative advantage over
- Online sellers enjoy a comparative advantage over small shops.
- lose a comparative advantage
- Rising wages made the factory lose its comparative advantage.
Synonyms and how they differ
- competitive advantage
- Use this for a firm's edge over rivals; comparative advantage is the economic idea about lower opportunity cost between countries.
- edge
- Informal and general; it means any small advantage, not the technical trade concept.
Opposites
Word family
- comparatively adverb
- in a way that compares two things, or to a moderate degree
- comparison noun
- the act of examining how things are alike or different
- compare verb
- to look at things to see how they differ
Commonly confused: comparative advantage or competitive advantage? comparative advantage or absolute advantage?
comparative advantage vs competitive advantage
Competitive advantage means being better than rivals right now; comparative advantage is about producing at lower opportunity cost, even if you are not the best at anything.
comparative advantage vs absolute advantage
Absolute advantage means producing more with the same resources; comparative advantage is about lower opportunity cost.
Practice
Which sentence uses 'comparative advantage' correctly?
Choose one answer.
'Comparative advantage' means producing something at lower opportunity cost, as in the coffee example. Option 2 misuses it for a simple comparison, option 3 describes a physical win (absolute advantage), and option 4 is nonsense.
Make it your own
Write a sentence using “comparative advantage”, then check it and compare it with the examples above.