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Trade Between Countries with Radically Different Preferences

Author

Listed:
  • Koji Shimomura

    (Kobe University)

  • Murray Kemp

    (Macquarie University)

Abstract

We examine the role of radical international differences in preferences in determining patterns of international trade, given that the trading countries share a common technology and identical factor endowment ratios. It is characteristic of our model that the equilibrium autarkic commodity price ratios are unique and negative and that there is a unique positive equilibrium free-trade price ratio, implying that the positive equilibrium free-trade price ratio is not bounded by the equilibrium autarkic price ratios. This finding contrasts sharply with the familiar Torrens-Ricardo and Heckscher-Ohlin propositions

Suggested Citation

  • Koji Shimomura & Murray Kemp, 2005. "Trade Between Countries with Radically Different Preferences," Economics Bulletin, AccessEcon, vol. 6(19), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-05f10091
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    More about this item

    Keywords

    preferences;

    JEL classification:

    • F1 - International Economics - - Trade

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