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

Naoki Yoshihara () and Soh Kaneko ()
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Soh Kaneko: Faculty of Economics, Keio University

No 2016-04, UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

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 withincomplete 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)
Date: 2016
New Economics Papers: this item is included in nep-pke
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Citations: View citations in EconPapers (8)

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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 (2016)
Working Paper: On the existence and characterization of unequal exchange in the free trade equilibrium (2015)
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