Chapter 12 The Gains from Trade and Refusal to Trade
Globalization and Emerging Issues in Trade Theory and Policy
ISBN: 978-1-84663-962-3, eISBN: 978-1-84663-963-0
Publication date: 1 October 2008
Abstract
Purpose − Instances of refusal to trade stand in contrast to the theorems on the gains from trade. Two paradigms, second-best and political economy, have been used to explain refusal to trade. Murray Kemp (1962) provided a foundation for the political economy paradigm when he noted that, in the absence of lump-sum redistribution, the theorems on the gains from trade are “true but irrelevant”. This chapter takes Murray Kemp's observation as a point of departure for a consideration of the relation between individual and group gains from trade. Paradigms in explaining refusal to trade are distinguished.
Methodology/Approach − This chapter examines ideas underlying explanations for refusal to participate in international trade.
Findings − Two different approaches are identified in modeling and explaining why the gains from trade are compromised by refusal of governments to allow free trade. The second-best approach suggests a justification for refusal to trade while the political economy approach with public-choice foundations proposes an explanation.
Practical implications − Ideology expressed in how governments are viewed can influence economic analysis.
Keywords
Citation
Hillman, A.L. (2008), "Chapter 12 The Gains from Trade and Refusal to Trade", Tran-Nam, B., Van Long, N. and Tawada, M. (Ed.) Globalization and Emerging Issues in Trade Theory and Policy (Frontiers of Economics and Globalization, Vol. 5), Emerald Group Publishing Limited, Leeds, pp. 193-208. https://doi.org/10.1016/S1574-8715(08)05012-4
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited