Are the antiglobalists right? Gains-from-trade without a walrasian auctioneer

Hector Calvo Pardo

PSE Working Papers from HAL

Abstract: We examine whether the "fear" of globalisation can be rationalised by economic theory. To do so, we depart from the standard AD/AS (partial) equilibrium model where the coordinational role of the Auctioneer is substituted by an implementation device based on learning (Guesnerie, 1992). By endowing producers with a learning ability to forecast market prices, individual profit-maximizing production decisions become interdependent in a strategic sense (strategic substitutes). Performing basic comparative statics exercises, we show that "competitiveness" matters in a precise sense: as foreign producers gain access to the home market, home producers' ability to forecast market prices is undermined, so being their ability to forecast the profit consequences of their production decisions. When performing a standard open economy exercise in such a framework, we show that the existence of standard efficiency gains - due to the increase in competition (or spatial price stabilization) - is traded-off against coordination upon the welfare enhancing free-trade equilibrium (stabilizing price expectations). Therefore, we identify a new rationale for an exogenous price intervention in open economy targeting coordination, to allow trading countries to fully reap the benefits from trade. We illustrate this point showing that classical measures evaluating ex-ante the desirability of economic integration (net welfare gains) do not always advice integration between two expectationally stable economies.

Keywords: open economy; rational expectations; coordination; common knowledge; économie ouverte; anticipations rationnelles; connaissance commune (search for similar items in EconPapers)
Date: 2005-10
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590718v1
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Related works:
Journal Article: Are the antiglobalists right? Gains-from-trade without a Walrasian auctioneer (2009)
Working Paper: Are the antiglobalists right? Gains-from-trade without a walrasian auctioneer (2005)
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