Although J.S.Mill recognized that the region of mutually beneficial trade is bounded by the cost ratios of two countries, it was not until David Ricardo developed the theory of reciprocal demand that the equilibrium terms of trade could be determined.

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David Ricardo is known for developing the theory of comparative advantage, not the theory of reciprocal demand, which was indeed developed by J.S. Mill. Ricardo's theory explains how countries benefit from trade even if one can produce everything more efficiently than the other, while Mill's theory of reciprocal demand deals with determining the equilibrium terms of trade between countries.