We use the HOS model of international trade to find a link between trading costs and pattern of trade, not just its effect on volume of trade. We prove that higher trading costs in labor-abundant countries will restrict volume of world trade by working against factor endowment bias and conversely for the capital-abundant nation. Asymmetric trading cost between goods may have paradoxical output ...

We investigate connections between SAT (the propositional satisfiability problem) and combinatorics, around the minimum degree of variables in various forms of redundancy-free boolean conjunctive normal forms (clause-sets). Let μvd(F ) ∈ N for a clause-set F denote the minimum variable-degree, the minimum of the number of occurrences of a variable. A central result is the upper bound σ(F ) + 1 ...

Numerous developing economies depend vitally on renewable natural-resource (NR)-based commodities. This study develops a general equilibrium model to examine the steady-state impact of changes in small economy's NR congestion under open access and optimal regulation. issue has often been examined 'low' (LC) – with MC > AC both upward sloping. Two more categories, 'high' (HC) 'super' (SC) whose ...

Why can subsidies lead to lower welfare? Intuitively, autarky is one extreme or corner solution and we have seen that some trade must be beneficial. This does not imply that free trade is optimal (it is beneficial); but subsidies lead to larger volumes of trade than free trade and thus may lead to declines in welfare. In other words, the fact that welfare is increasing in trade flows in some do...

In a two-country infinite-horizon model, with two traded goods and two factors of production and no international borrowing and lending, there is no convergence of incomes if there is factor-price equalization. With factor-price equalization, the Euler equations of the two economies become identical. I show that in such a set-up if agents have a non-zero probability of death, then we do get con...

This paper investigates the implications for international markets of the existence of retailers/wholesalers with market power. Two main results are shown. First, in the presence of buyer power trade liberalization may lead to retail market concentration. Due to this concentration retail prices may be higher and welfare may be lower in free trade than in autarky, thus reversing the standard e¤e...

We develop a simple two country model of international trade that assumes that there is a fixed cost associated with transporting goods across national boundaries. We show that this leads to multiple equilibria that can be Pareto-ranked. One of these equilibria is autarky. We argue that the existence of fixed costs in transport can help explain the low volume of North-South trade. ∗GREQAM, Univ...

This paper examines the issue of the effect of international trade on quality choice by firms in a factor-endowment framework. Factor price equalization implies product quality equalization. In the NorthSouth context it means that the South catches up with the North in product quality due to the competitive pressure from international trade, not because of technology adoption. Free trade may in...

Some trades based on differences in beliefs might cause more harm than good. Should they be restricted? If yes, how? We propose three limits on regulation aimed at protecting beneficial trades: Unanimity – the regulator should not object to trades with identical beliefs; Autarky – if the regulator does not object to two unrelated trades, both with identical beliefs, then it should not object to...