The author proposes an alternative to the traditional definition of the gains from international trade and, hence, an alternative defense of free trade. Rather than showing that free trade allows a country to consume more of all final goods, the author’s approach shows that free trade allows a country to consume the same basket of final goods that it would consume in autarchy but at a reduced cost measured in terms of foregone productive resources. Thus, free trade gives a country the option to maintain the same material standard of living that it would have enjoyed in autarchy while enjoying more leisure and using fewer natural resources in production.
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Find related papers by JEL classification: A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate F11 - International Economics - - Trade - - - Neoclassical Models of Trade