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An Experimental Investigation of the Patterns of International Trade

In: International Trade Agreements and Political Economy

Author

Listed:
  • CHARLES N. NOUSSAIR

    (Department of Economics, Krannert School of Management, Purdue University, West Lafayette, IN 47907, USA)

  • CHARLES R. PLOTT

    (Humanities and Social Sciences- m/c 228-77, California Institute of Technology, Pasadena, CA 91125, USA)

  • RAYMOND G. RIEZMAN

    (Department of Economics, College of Business Administration, W210 PBAB, University of Iowa, Iowa City, lA 52242, USA)

Abstract

This paper studies a laboratory economy with some of the prominent features of an international economic system. The patterns of trade and output predicted by the law of comparative advantage are observed evolving within the experimental markets. Market prices and quantities move in the direction of the competitive equilibrium, but the quantitative predictions of the (risk-neutral) competitive equilibrium are rejected. Considerable amounts of economic activity occur as disequilibria. Factor-price equalization is observed, but there is a universal tendency for factors of production to trade at prices below their marginal products.

Suggested Citation

  • Charles N. Noussair & Charles R. Plott & Raymond G. Riezman, 2013. "An Experimental Investigation of the Patterns of International Trade," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 17, pages 299-328, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814390125_0017
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    Keywords

    International Trade; Political Economy; Theory of International Free Trade Agreements; Customs Unions; Tariff Dynamics; Storable Votes;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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