Generalized Welfare Gains from Trade Formulas

Wisarut Suwanprasert

No 214, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This paper develops a novel approach to derive welfare gains from trade formulas applicable to a wide range of trade models. First, I derive a general formula for classical trade models based on the formula established by Arkolakis et al. (2012), henceforth referred to as “ACR.†This new formula incorporates a nuanced consideration of the production share and elasticity of substitution between outputs, offering a refined formula for assessing the welfare gains associated with movements along the production possibility frontier. Second, I use this new approach to generalize the ACR formula. This new derivation broadens the applicability of the ACR formula, extending its relevance to a broader class of trade models than previously considered.

Keywords: Trade theory; Gains from trade; Classical trade models; ACR formula (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2024-02
New Economics Papers: this item is included in nep-int
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