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Yin and Yang in International Trade: Where Is Pareto When We Need Him?

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  • Kerton, Robert R.

Abstract

Several types of international transactions are examined to assess the relative value of exchanges that are not Pareto-optimal. Informational asymmetries are frequently present in international trade, providing sound reasons to doubt that Pareto optimality can always be assumed. The balance posed by yin and yang provides a better approach. “Lemons” outcomes can challenge finances and threaten health. International policies to provide reliable information on price and quality are found to be partly successful. Notably, in many countries the core market institution, competition policy, is defective or non-existent.

Suggested Citation

  • Kerton, Robert R., 2008. "Yin and Yang in International Trade: Where Is Pareto When We Need Him?," The Journal of Economic Asymmetries, Elsevier, vol. 5(2), pages 39-52.
    • Handle: RePEc:eee:joecas:v:5:y:2008:i:2:p:39-52
    DOI: 10.1016/j.jeca.2008.02.003
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    References listed on IDEAS

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    1. Steven Salop, 1977. "The Noisy Monopolist: Imperfect Information, Price Dispersion and Price Discrimination," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 393-406.
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    More about this item

    Keywords

    024; D82; F13; K21; Trade policy; Competition policy; Consumer protection; Corruption; Hazardous products; Price-fixing; Lemons;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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