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Recent Challenges to the Classical Gains–from–Trade Proposition

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  • Murray C. Kemp
  • Koji Shimomura

Abstract

The classical gains–from–trade conjecture was finally given a thorough Arrow–Debreu proof in 1972. Since then, the proposition has been repeatedly challenged. Some of the challenges rest on grounds which in no respect violate Arrow–Debreu assumptions. Those challenges are therefore without foundation. The remaining challenges rest on the assertion that some of the Arrow–Debreu assumptions are unnatural and unnecessarily restrictive or on the imposition of artificial restrictions on the set of permissible compensatory transfers. We conclude that none of the challenges can be sustained.

Suggested Citation

  • Murray C. Kemp & Koji Shimomura, 2002. "Recent Challenges to the Classical Gains–from–Trade Proposition," German Economic Review, Verein für Socialpolitik, vol. 3(4), pages 485-489, November.
    • Handle: RePEc:bla:germec:v:3:y:2002:i:4:p:485-489
    DOI: 10.1111/1468-0475.00069
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    1. Chichilnisky,Graciela (ed.), 1999. "Markets, Information and Uncertainty," Cambridge Books, Cambridge University Press, number 9780521553551.
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      • CORDELLA, Tito & MINELLI, Enrico & POLEMARCHAKIS, Heracles, 1999. "Trade and welfare," LIDAM Reprints CORE 1379, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Wolfgang Kerber & Oliver Budzinski, "undated". "Towards a Differentiated Analysis of Competition of Competition Laws," German Working Papers in Law and Economics 2004-1-1090, Berkeley Electronic Press.

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