The Voluntary (Private) Production of Public Goods, the Gains from Trade, and Comparative Advantage

Albert Schweinberger

Review of International Economics, 1995, vol. 3, issue 2, 127-40

Abstract: Any (finite) number of privately produced public goods are incorporated into a general trade-theory model of private goods and factors. Postulating Cournot-Nash behavior, a necessary condition for gainful trade is derived. Potential trade gains are related to the law of comparative advantage in private goods and the change in the underproduction of public goods. A sufficient condition is also proven. Trade gains/losses are compared for more or less populous economies. All the results have analogues in the literature on imperfect competition and/or increasing returns to scale. Copyright 1995 by Blackwell Publishing Ltd.

Date: 1995
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