Trade Between Countries with Radically Different Preferences

Koji Shimomura and Murray Kemp

Economics Bulletin, 2005, vol. 6, issue 19, 1-9

Abstract: We examine the role of radical international differences in preferences in determining patterns of international trade, given that the trading countries share a common technology and identical factor endowment ratios. It is characteristic of our model that the equilibrium autarkic commodity price ratios are unique and negative and that there is a unique positive equilibrium free-trade price ratio, implying that the positive equilibrium free-trade price ratio is not bounded by the equilibrium autarkic price ratios. This finding contrasts sharply with the familiar Torrens-Ricardo and Heckscher-Ohlin propositions

Keywords: preferences (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2005-10-31
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