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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. Copyright Verein für Socialpolitik and Blackwell Publishers Ltd 2002.

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
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    References listed on IDEAS

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    1. Grandmont, J. M. & McFadden, D., 1972. "A technical note on classical gains from trade," Journal of International Economics, Elsevier, vol. 2(2), pages 109-125, May.
    2. Cordella, Tito & Ventura, Luigi, 1992. "A note on redistributions and gains from trade," Economics Letters, Elsevier, vol. 39(4), pages 449-453, August.
    3. CORDELLA, Tito & MINELLI, Enrico & POLEMARCHAKIS, Heracles, 1993. "Trade and Welfare," CORE Discussion Papers 1993033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
      • CORDELLA, Tito & MINELLI, Enrico & POLEMARCHAKIS, Heracles, 1999. "Trade and welfare," CORE Discussion Papers RP 1379, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. David M. G. Newbery & Joseph E. Stiglitz, 1984. "Pareto Inferior Trade," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 1-12.
    5. Kemp, Murray C & Wan, Henry Y, Jr, 1972. "The Gains from Free Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 509-522, October.
    6. Eliakim Katz & Moshe Syrquin & Lester C. Thurow, 1982. "The Failure of Psychic Income as a Source of Market Failure [with Reply]," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 4(4), pages 623-628, July.
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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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