Gains from Trade

Gains from trade refer to the benefits that individuals or countries experience when they specialize in producing goods or services where they have a comparative advantage and then exchange them. This process allows each party to obtain more of what they value than if they tried to produce everything themselves. By trading, resources are allocated more efficiently, leading to increased overall productivity and a better standard of living for all involved. Essentially, it’s the economic advantage gained when parties cooperate and specialize, making everyone better off than they would be acting alone.