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Book part
Publication date: 1 October 2008

Kazumichi Iwasa, Raymond Riezman and Koji Shimomura

Purpose – We ask how far the Kemp–Wan Pareto-improving result can hold without inter-country transfers.Methodology/approach – Assuming that the standard revenue and…

Abstract

Purpose – We ask how far the Kemp–Wan Pareto-improving result can hold without inter-country transfers.

Methodology/approach – Assuming that the standard revenue and expenditure functions exist, we consider tariff adjustments for some group of countries such that they makes member countries better off without affecting non-member countries (a la Kemp–Wan).

Findings – Any group of countries can engage in a Pareto-improving non-discriminatory tariff reform without income transfers, if (i) there are more than two tradable goods and (ii) the initial tariff vectors of the member countries satisfy the non-proportionality condition. We then show that if these two conditions hold then countries can form a Pareto-optimal customs union. Depending on initial conditions, transfers may be necessary for the customs union to be Pareto-improving.

Originality/value of paper – The Pareto-improving result of this chapter is based on tariff reform only.

Details

Globalization and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84663-963-0

Keywords

Book part
Publication date: 2 June 2008

Didier Laussel and Raymond Riezman

We develop a simple two-country model of international trade that assumes that there is a fixed cost of doing international trade. We show that this leads to multiple…

Abstract

We develop a simple two-country model of international trade that assumes that there is a fixed cost of doing international trade. We show that this leads to multiple equilibria that can be Pareto-ranked. We examine the stability properties of these equilibria.

Details

Contemporary and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84950-541-3

Keywords

Content available
Book part
Publication date: 2 June 2008

Abstract

Details

Contemporary and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84950-541-3

Content available
Book part
Publication date: 1 October 2008

Abstract

Details

Globalization and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84663-963-0

Book part
Publication date: 1 October 2008

Arye L. Hillman

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…

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.

Details

Globalization and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84663-963-0

Keywords

Book part
Publication date: 2 June 2008

Carsten Kowalczyk

This chapter provides a formal analysis of the economic welfare effects for large and small partners to free trade agreements. Michaely (1998) has demonstrated that large…

Abstract

This chapter provides a formal analysis of the economic welfare effects for large and small partners to free trade agreements. Michaely (1998) has demonstrated that large country welfare is U-shaped in the small country's size. I derive the welfare for the large country for all possible small country sizes, and show that the maximum possible loss for the large country is twice its tariff revenue. I identify the data necessary to estimate the welfare effects and consider how initial trade volumes, tariffs, and international price differences affect the large country's welfare.

Details

Contemporary and Emerging Issues in Trade Theory and Policy
Type: Book
ISBN: 978-1-84950-541-3

Keywords

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