Gains from trade
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In
liberalizing trade.[4]
Dynamics
Gains from trade are commonly described as resulting from:
- specialization in production from division of labor, economies of scale, scope, and agglomeration[5] and relative availability of factor resources in types of output by farms, businesses, location[6] and economies
- a resulting increase in total output possibilities
- trade through markets from sale of one type of output for other, more highly valued goods.[7]
Market incentives, such as reflected in
Arrow-Debreu goods, formal proofs came in 1972 for determining the condition of no losers in moving from autarky toward free trade.[13]
The proof does not state that no involvement is the best economic outcome. Rather, a large economy might be able to set taxes and subsidies to its benefit at the expense of other economies. Later results of Kemp and others showed that in an Arrow-Debreu world with a system of
lump-sum compensatory mechanisms, corresponding to a customs union for a given subset set of countries (described by free trade among a group of economies and a common set of tariffs), there is a common set of world' tariffs such that no country would be worse off than in the smaller customs union. The suggestion is that if a customs union has advantages for an economy, there is a worldwide customs union that is at least as good for each country in the world.[14]
See also
Notes
- Alan V. Deardorff, Deardorff's Glossary of International Economics, 2010. Consumer surplus.
- ^ Deardorff's Glossary of International Economics, 2010. Producer surplus.
- ^ Deardorff's Glossary of International Economics, 2010. Tariff.
- William D. Nordhaus, 2004. Economics, Glossary of Terms (end), "Gains from trade", McGraw-Hill.
- doi:10.1086/261015
• William C. Strange, 2008, "urban agglomeration," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. - ^ Anthony Venables, 2008. "new economic geography," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
- ^ Paul A. Samuelson and William D. Nordhaus, 2004. Economics, McGraw-Hill, ch. 2, "Trade, Specialization, and Division of Labor" section.
- ^ Paul A. Samuelson and William D. Nordhaus, 2004. Economics, ch. 12, 15, "Comparative Advantage among Nations" section," "Glossary of Terms," Gains from trade.
- ^ Alan V. Deardorff, Glossary of International Economics], 2006. "Gains from trade."
- ^ David Ricardo, 1817. On the Principles of Political Economy and Taxation.
- ^ Ronald Findlay, 2008. "comparative advantage," The New Palgrave Dictionary of Economics, 2nd Edition, 1st paragraph. Abstract.
- JSTOR 137133
• _____, 1962. "The Gains from International Trade Once Again," Economic Journal, 72(288), pp. 820-829. Archived 2011-07-23 at the Wayback Machine
• Alan V. Deardorff, 2006. Glossary of International Economics, "Gains from trade theorem". - JSTOR 2525840
- The New Palgrave: A Dictionary of Economics. Palgrave Macmillan, 453-454.
• Ronald Findlay, 2008. "comparative advantage," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
• James E. Anderson, 2008. "international trade theory," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
References
- Jagdish N. Bhagwati, Arvind Panagariya, and T. N. Srinivasan, 1998, 2nd ed. Lectures on International Trade, ch. 18 & 19, pp. 265-79.
- Giovanni Facchini and Gerald Willmann, 2001. "Pareto Gains from Trade," Economia Politica, pp. 207-216. 1999 preprint version.
- Murray C. Kemp, 1995. The Gains from Trade and the Gains From Aid: Essays in International Trade Theory.
- Joy Mazumdar, 1996. "Do Static Gains from Trade Lead to Medium-Run Growth?" Journal of Political Economy, 104(6), 1996, pp. 1328-1337. JSTOR 2138942
- Dr, Mrs. Mangla P. Jahgle, Dr. Mrs. Madhura Joshi, Mrs. Sumati V. Shinde, "International Economics",ed 2008, ch 5, pp 122–125
- M.L Jhingan,"International Economics",ed 2008,ch 16,pp 155
- K.K. Dewett, "Modern Economic Theory",2008,ch 55,pp 671–672
External links
- Gains from Trade, from "International Trade," Arnold Kling
- Summary: Main Points on Economic Efficiency and the Gains from Trade, including graphs for consumer surplus and producer surplus
- [1], Gains from internal trade
- [2] Oscar Volij