Finite Change – Implication for Trade Theory, Policy and Development

Sugata Marjit and Biswajit Mandal

MPRA Paper from University Library of Munich, Germany

Abstract: The paper traces the evolution of trade theory beyond the standard 2X2 models and looks for implications of higher dimensional structures and adjustment problems with large shocks. Typically trade theory and policy talk about expansion and contraction of existing activities. In this paper we explore various situations where certain activities vanish altogether. Similarly other activities may come to existence following major changes in the economic environment. Such regime shifts are interpreted as finite changes as opposed to infinitesimal alterations. These changes allow us to think differently about standard policy changes, all of which have direct implications for developing countries. Emigration, wage inequality and distribution, non-equivalence of tariff and quota in competitive models, capital mobility and corruption are some of the applications involving such finite change. At a theoretical level the paper starts by an interesting interpretation of factor price “non-equalization” hypothesis in the basic Heckscher-Ohlin-Samuelson type models without depending on standard text book type argument.

Keywords: General Equilibrium; Trade (search for similar items in EconPapers)
JEL-codes: D5 F1 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Chapter: Finite Change—Implication for Trade Theory, Policy and Development (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:68228

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