Pareto Optimal Trade in an Uncertain World: GMOs and the Precautionary Principle

Robert G Chambers () and Tigran Melkonyan

American Journal of Agricultural Economics, 2007, vol. 89, issue 2, pages 520-532

Abstract: Optimal trade policy in an uncertain world is examined. Decision-maker attitudes toward uncertainty are represented in terms of the Gilboa-Schmeidler (1989) maximin expected-utility (MMEU) model. The central result is that in a two-country, general-equilibrium setting with both trading partners possessing an MMEU preference structure, Pareto optimality can require one trading partner to absorb all uncertainty in the economy if its set of priors is a subset of its trading partners. An immediate corollary is that autarky is Pareto optimal if the trading partner with the more inclusive set of priors either chooses or is endowed with a nonstochastic technology. Copyright 2007 American Agricultural Economics Association.

Date: 2007

Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... &year=2007&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:ajagec:v:89:y:2007:i:2:p:520-532

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0002-9092

Access Statistics for this article

American Journal of Agricultural Economics is edited by Peter Berck, Robert J. Myers, Ian M. Sheldon and B. Wade Brorsen

More articles in American Journal of Agricultural Economics from American Agricultural Economics Association
Series data maintained by Christopher F. Baum ().