comparative advantage investment & finance definition

The ability of one country or region to produce a product at a reduced cost compared with another country or region. The nation with the lower cost structure is said to have a comparative advantage over the other country. Often countries attempt to use trade law or trade monitoring bodies to allege price dumping or violations of expected labor practices that unfairly allow companies in that country to be low-cost producers and thus grab a comparative advantage. One company may also have a comparative advantage over others if its cost structure is lower.