The essay discusses the mechanisms of allocating scarce resources globally using various trade models. Each model has its own advantages and drawbacks. The theory of absolute advantage is the first pioneering theory of international trade, but it fails to explain trade between nations when one nation has an absolute cost advantage over all products. David Ricardo's comparative advantage theory addresses this issue. Other important trade models include Heckscher-Ohlin's factor endowment model, intra-industry trade model, product life cycle theory, and Porter's Diamond model of national advantage.