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This chapter discusses the power and limitations of the comparative cost theory of international trade. The theory of comparative costs is often assumed to be capable of explaining the network of interregional trade flows. The magnitude and the direction of these flows is supposed to depend on the specific combinations of capital, labor and other primary resources possessed by the trading countries. Given the quantities of primary resources possessed by each country, the comparative theory provides a systematic means of determining how many chips of different colors each player will be prepared to give away.