I feel like I might be being a little coy stating this, but I feel like “heterogeneous preferences” may not be as inadequate as it seems. At least, if you allow that those heterogeneous preferences are not only innate like taste preference for apples over oranges.
If I have a comparative advantage in making apples, I’m going to have a lot of apples, and value the marginal apple less than the marginal orange. I don’t think this is a different kind of “preference” than liking the taste of oranges better: Both base out in me preferring an orange to an apple. And so we engage in trade for exactly that reason. In fact, I predict we stop trading once I value the marginal apple more than the marginal orange (or you, vice versa), regardless of the state of my comparative advantage. (That is, in a causal sense, the comparative advantage is covered by my marginal value assignments. My comparative advantage may inform my value assignments, but once you know those, you don’t need to know if I still have a comparative advantage or not for the question “will I trade apples for oranges?”)
Comparative advantage is why trade is useful, but I don’t know if it’s really accurate to say that heterogeneous preferences are an “inadequate answer to why we trade.”
I feel like I might be being a little coy stating this, but I feel like “heterogeneous preferences” may not be as inadequate as it seems. At least, if you allow that those heterogeneous preferences are not only innate like taste preference for apples over oranges.
If I have a comparative advantage in making apples, I’m going to have a lot of apples, and value the marginal apple less than the marginal orange. I don’t think this is a different kind of “preference” than liking the taste of oranges better: Both base out in me preferring an orange to an apple. And so we engage in trade for exactly that reason. In fact, I predict we stop trading once I value the marginal apple more than the marginal orange (or you, vice versa), regardless of the state of my comparative advantage. (That is, in a causal sense, the comparative advantage is covered by my marginal value assignments. My comparative advantage may inform my value assignments, but once you know those, you don’t need to know if I still have a comparative advantage or not for the question “will I trade apples for oranges?”)
Comparative advantage is why trade is useful, but I don’t know if it’s really accurate to say that heterogeneous preferences are an “inadequate answer to why we trade.”