comparative advantage

comparative advantage definition - business

comparative advantage

In economics, the benefit to regions and countries of producing goods and services at which they are most efficient, even though the same goods and services can be produced more efficiently elsewhere. The theory of comparative advantage is the basis for justifying the economic benefits of free trade. Compare absolute advantage. See also acquired advantage.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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