Trade and Welfare in General Equilibrium

Michihiro Ohyama
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Michihiro Ohyama: Keio University

Chapter Chapter 4 in Macroeconomics, Trade, and Social Welfare, 2016, pp 55-91 from Springer

Abstract: Abstract In his 1939 article, Samuelson initiated the modern discussion of the gains from trade. Concerning himself with a small price-taking country and basing his cases on the compensation principle and the axiom of revealed preference, he established that the introduction of external trade could make all citizens better off. His approach received a considerable amount of notice, but no further result came of it for some time. It was not until two decades later that Kemp (1962), along with Samuelson (1962), revived the subject by showing, under a more general condition, that the consumption possibility frontier of the post-trade situation lies uniformly outside that of the pre-trade situation. Their findings, however, seem to call for further generalization.

Keywords: Free Trade; Custom Union; Price Vector; Trade Effect; Trade Diversion (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/978-4-431-55807-1_4

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