CHAPTER 10 
Two CouNTrIiES COMPETING IN A THIRD 
STILL another modifying circumstance is now to be introduced. 
So far the problems have been treated as if there were but two 
countries. We proceed to consider some changes or qualifications 
which appear when we have not a single country exchanging with 
one other, but several countries competing with each other in 
supplying another country. Here, as in the last chapter, the 
procedure will be that of considering labor costs alone, and these in 
their simplest aspects, the reader being assumed to bear in mind 
that other factors (such as non-competing groups among laborers, 
capital and the return on it, varying costs) complicate the situation 
and may modify the results. The analysis of the fundamental fac- 
tor of labor costs, taken by itself, serves to bring out the essentials 
for the problem here in hand. 
First, suppose a case in which there are two countries on the one 
side, a single country on the other. Let the two be the United 
States and Russia; the single one, England. Let the conditions be 
such that both the United States and Russia have a comparative 
advantage over England in wheat, England a comparative advan- 
tage over them in cloth. In figures, for example, thus: 
=x =~ mmoduce 20 wheat 
20 cloth 
10 wheat 
15 cloth 
10 wheat 
10 cloth 
A glance shows that both the United States and Russia can trade 
to advantage with England, exporting wheat and getting cloth in 
exchange. Both have a comparative advantage over England in 
wheat, tho not of precisely the same kind. The United States has 
n"ry