Appendix to Chapter 11

Giancarlo Gandolfo

Chapter Chapter 25 in International Trade Theory and Policy, 2014, pp 543-546 from Springer

Abstract: Abstract If we denote by v the social welfare function having the quantities demanded (consumed) of the two commodities as arguments, we have, for country 2, 25.1 $$\displaystyle{ v = v\left (A_{2}^{D},B_{ 2}^{D}\right ) = v\left (A_{ 2} + E_{2A},B_{2} + E_{2B}\right ), }$$ as $$E_{2A} = A_{2}^{D} - A_{2}$$ etc. (see Sect. 19.3). We have to maximize (25.1) under the constraints of country 1’s offer curve and of the relations linking the variables of the model of general international equilibrium. Instead of using Lagrange multipliers, it is simpler here to introduce the constraints directly into the maximand.

Keywords: International General Equilibrium; Social Welfare Function; Lagrange Multiplier; Optimal Tariff; Paretian Conditions (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-642-37314-5_25

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DOI: 10.1007/978-3-642-37314-5_25

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