On the Existence and Characterization of Unequal Exchange in the Free Trade Equilibrium

Naoki Yoshihara () and Soh Kaneko

No 635, Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: As in Roemer (1982, chapter 1), this paper considers a simple international trade model and examines the existence and characterization of free trade equilibria involving the unequal exchange of labor (UE). The paper provides an almost complete characterization of the domain of economies in which free trade equilibria with incomplete specialization exist. Moreover, the necessary and sufficient conditions for free trade equilibrium to involve UE is identified. It suggests that the emergence of free trade equilibria with UE cannot be entailed by the competitive mechanism of markets and unequal distribution of wealth alone, but might be understood as an outcome of equilibrium selection on the basis of Nash bargaining between rich and poor nations.

Keywords: Unequal exchange of labor; International division of labor; Subsistence international economies (search for similar items in EconPapers)
JEL-codes: D51 D63 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2016-02
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27724/DP635.pdf

Related works:
Journal Article: On the Existence and Characterization of Unequal Exchange in the Free Trade Equilibrium (2016)
Working Paper: On the existence and characterization of unequal exchange in the free trade equilibrium (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hituec:635

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