Measuring the Unequal Gains from Trade *

On Measuring the Welfare Gains from Trade under Consumer Heterogeneity

I develop a multi-country multi-industry model of trade that features heterogeneous consumers with non-homothetic preferences. I use the model to quantify the measurement errors in the welfare gains estimates caused by the assumption of a representative consumer (ARC). First, I reduce the world level of all trade costs by 15% and find that ARC overestimates (underestimates) the gains of the poo...

Measuring gains from trade and an application to fair allocation

In the classical model of exchange, gains from trade can be obtained if there exists a feasible allocation which each agent prefers to her endowment. There is no single accepted way of measuring these gains in terms of welfare, for interpersonal comparisons of welfare are needed. In this paper we propose a method of measuring gains from trade in terms of quantities of goods, avoiding welfare co...

Measurable Dynamic Gains from Trade

Volatility, Insurance, and the Gains from Trade∗

By reducing the negative correlation between local prices and productivity shocks, trade liberalization changes the volatility of returns. In the context of agriculture in developing countries—where production is risky, producers are risk averse, and insurance markets are incomplete—this change in volatility may have large welfare effects. In this paper, we empirically, analytically, and quanti...

Transboundary Pollution and the Gains from Trade

We analyse the effects of transboundary pollution on trade patterns and welfare in a general equilibrium trade model. Production in a dirty industry generates pollution that negatively effects productivity, both at home and abroad, in a clean industry. Trade may lead to the spatial separation of production but the existence of transboundary pollution can offset the benefits from specialization....