Endogenous enclosure in North-South trade
AbstractWe show that the second-best case against the optimality of free trade remains valid in the face of a well-targeted, but costly, policy response. Trade between a North, where property rights can be enforced at relatively low cost, and an otherwise identical South, yields trade patterns and welfare results nearly identical to those previously shown to arise if North and South differ exogenously in the extent of control over resources. Both nations respond optimally to world prices, and the opening of trade leads to the development of property rights in the South. Nonetheless, for a set of world prices bounded by the South's autarky price, the South is better off under autarky and is made worse off by each increase in its export price.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 42 (2009)
Issue (Month): 3 (August)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
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