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| Author: | Wong, K. |
| Title: | Welfare comparison of trade situations |
| Journal: | Journal of International Economics
1991 : FEB, VOL. 30:1/2, p. 49-68 |
| Index terms: | TRADE WELFARE ECONOMIC ANALYSIS FREE TRADE TRADE RESTRICTION |
| Language: | eng |
| Abstract: | The compensation approach /the transition from one situation to another is said to be preferable if all losers can be compensated, while at least one individual can be made better off/ is applied to compare two types of trade situations: free trade and restricted trade. A model is offered considering a small many-household open economy with competitive markets. Two types of compensations, lump-sum transfers and compensation taxes are compared. Necessary and sufficient conditions for welfare improvement are derived. Welfare changes under restricted trade are investigated. Five propositions are made and it is shown how they can be applied to analyse the welfare impacts of some changes in trade conditions. |
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