Limitations of Classical Theory:

1. Unrealistic assumptions: The classical theory of international trade is based on unrealistic assumptions like perfect competition, free trade, and constant returns to scale.

2. Neglects non-economic factors: Classical theory ignores non-economic factors like political stability, cultural differences, and technological differences that can impact international trade.

3. No consideration of distributional effects: The classical theory of international trade does not consider the distributional effects of trade. It assumes that free trade will benefit all countries equally.

4. Does not account for trade restrictions: The classical theory does not account for trade restrictions like tariffs and quotas that can distort international trade.

Ricardian Theory vs Classical Theory:

1. Comparative advantage: The Ricardian theory of international trade is based on the principle of comparative advantage. It suggests that countries should specialize in producing goods in which they have a comparative advantage and trade with other countries to maximize their welfare. The classical theory, on the other hand, focuses on absolute advantage.

2. Labor theory of value: The Ricardian theory is based on the labor theory of value, which suggests that the relative prices of goods are determined by the amount of labor required to produce them. The classical theory, on the other hand, is based on the theory of supply and demand.

3. Distributional effects: The Ricardian theory takes into account the distributional effects of trade. It suggests that trade can lead to winners and losers, and the winners should compensate the losers to ensure that everyone benefits. The classical theory does not consider the distributional effects of trade.

4. Real-world factors: The Ricardian theory takes into account real-world factors like trade restrictions, transportation costs, and transaction costs that can impact international trade. The classical theory assumes perfect competition and free trade.

In conclusion, the Ricardian theory of international trade differs from the classical theory in several ways. It takes into account the distributional effects of trade, is based on the principle of comparative advantage, and considers real-world factors that can impact international trade.