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Second Best Redistributive Policies: The Case of International Trade


  • Guesnerie, Roger


The paper presents a brief review of recent work that focuses on the normative economics of international trade. In a Heckscher-Ohlin-like economy, with skilled and unskilled workers, the available redistributive tools (that include income taxation) are not powerful enough to allow the separation of efficiency and equity issues, and "production efficiency" is no longer desirable. At a social optimum that calls for redistribution toward the unskilled workers, the social value of the unskilled intensive good is necessarily smaller than its production price. This finding allows us to unify existing results and suggests conjectures. Copyright 2001 by Blackwell Publishing Inc.

Suggested Citation

  • Guesnerie, Roger, 2001. " Second Best Redistributive Policies: The Case of International Trade," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(1), pages 15-25.
  • Handle: RePEc:bla:jpbect:v:3:y:2001:i:1:p:15-25

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    References listed on IDEAS

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    6. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
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    8. Werlang, Sérgio Ribeiro da Costa, 1988. "Common knowledge," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 118, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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    Cited by:

    1. Roger Guesnerie, 2006. "De l'utilité du calcul économique public," Economie & Prévision, La Documentation Française, vol. 0(4), pages 1-14.
    2. Guillaume Daudin & Jean-Luc Gaffard & Francesco Saraceno, 2007. "Ordre et désordre dans l'échange international. Une revue de littérature," Revue de l'OFCE, Presses de Sciences-Po, vol. 100(1), pages 143-174.
    3. Keuschnigg, Christian & Ribi, Evelyn, 2009. "Outsourcing, unemployment and welfare policy," Journal of International Economics, Elsevier, vol. 78(1), pages 168-176, June.
    4. Philippe Bontems & Estelle Gozlan, 2018. "Trade, Environment and Income Inequality: An Optimal Taxation Approach," Post-Print hal-01702525, HAL.
    5. Hisahiro Naito, 2006. "Redistribution, production inefficiency and decentralized efficiency," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(5), pages 625-640, September.
    6. Martimort, David & Verdier, Thierry, 2009. "International Trade with Domestic Regulation under Asymmetric Information: A Simple General Equilibrium Approach," IDEI Working Papers 223, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jan 2010.
    7. repec:spo:wpecon:info:hdl:2441/3201 is not listed on IDEAS
    8. Hisahiro Naito, 2016. "Optimal Shadow Prices for the Public Sector in the Presence of a Non-linear Income Tax System in an Open Economy," Tsukuba Economics Working Papers 2016-003, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
    9. Davidson, Carl & Matusz, Steven J. & Nelson, Douglas R., 2007. "Can compensation save free trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 167-186, March.

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F10 - International Economics - - Trade - - - General


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