The modern version of the Ricardian model and its results are typically presented by constructing and analyzing an economic model of an international economy. In its most simple form the model assumes two countries producing two goods using labour as the only factor of production. Goods are assumed homogeneous, across firms and countries. Labour is homogeneous within a country but heterogeneous, across countries. Goods can be transported costlessly between countries. Labour can be reallocated costlessly between industries within a country but cannot move between countries.
Thus each country would export the good in which they have a comparative advantage. Trade flows would increase until the price of each good is equal across countries. In the end, the price of each country's export good, will rise and the price of its import good will fall.
The higher price received for each country's comparative advantage good would lead each country to specialize in that good. To accomplish......
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