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Decomposing the gains from trade in the presence of time-consuming consumption

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  • Tran-Nam, Binh

Abstract

We examine the decomposition of the gains from trade when consumption is time consuming in a simple open economy setting. While trade remains welfare improving, the sources of trade gainfulness differ from those in conventional trade models. In particular, the conventionally defined exchange (consumption) and specialisation (production) gains vanish. There are, however, positive gains from time reallocation (away from production toward consumption) and specialisation associated with this time reallocation.

Suggested Citation

  • Tran-Nam, Binh, 2017. "Decomposing the gains from trade in the presence of time-consuming consumption," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 7(1), pages 1-11.
  • Handle: RePEc:gok:ijdcv1:v:7:y:2017:i:1:p:1-11
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    File URL: http://www.ijdc.org.in/uploads/1/7/5/7/17570463/june2017art1v2.pdf
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    References listed on IDEAS

    as
    1. Martin, John P. & Neary, J. Peter, 1980. "Variable labour supply and the pure theory of international trade : An empirical note," Journal of International Economics, Elsevier, vol. 10(4), pages 549-559, November.
    2. Binh Tran-Nam, 2012. "An Extended Ricardian Model Incorporating a Consumption Time Constraint," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 1046-1051, November.
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    More about this item

    Keywords

    Gossen; Becker; Consumption time constraint; Gains from trade; Time reallocation;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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