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An adverse social welfare effect of a doubly gainful trade

Oded Stark, Ewa Zawojska, Wilhelm Kohler and Krzysztof Szczygielski

No 273147, Discussion Papers from University of Bonn, Center for Development Research (ZEF)

Abstract: Acknowledging individuals’ distaste for low relative income renders trade less appealing when trade is viewed as a technology that integrates economies by merging separate social spheres into one. We define a “trembling trade” as a situation in which gains from trade are overtaken by losses of relative income, with the result that global social welfare is reduced. A constructive example reveals that a “trembling trade” can arise even when trade is doubly gainful in that it increases the income of every individual and narrows the income gap between the trading populations.

Keywords: Financial Economics; International Relations/Trade (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2018-05-29
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Journal Article: An adverse social welfare effect of a doubly gainful trade (2018) Downloads
Working Paper: An adverse social welfare effect of a doubly gainful trade (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ubzefd:273147

DOI: 10.22004/ag.econ.273147

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