<p>I guess it is because there needs to be gains of trade, and prices are determined by supply and demand, and there would be more supply and demand from the larger country, so these prices would prevail.</p>
<p>But why would the relatively lower prices in the smaller country not prevail? especially in an international market which is a competitive market where firms are price takers?</p>

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2020-12-10T23:35:36.593Z
2020-12-10T23:35:36.593Z
H. Quader
<p>Why do prices tend to converge towards the pre-trade prices of the larger country when two countries trade based on comparative advantage?</p>

<international-economics><comparative-advantage>
Price convergence in international markets?
H. Quader
# Price convergence in international markets?

(Asked by: username_0 on 2020-12-10)

Why do prices tend to converge towards the pre-trade prices of the larger country when two countries trade based on comparative advantage?

**Tags:** international-economics, comparative-advantage

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## 1 answers

### Answer by username_0 on 2020-12-10. Score: 0 | Accepted answer

I guess it is because there needs to be gains of trade, and prices are determined by supply and demand, and there would be more supply and demand from the larger country, so these prices would prevail.

But why would the relatively lower prices in the smaller country not prevail? especially in an international market which is a competitive market where firms are price takers?


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