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Pareto Gains from Trade

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  • Giovanni Facchini
  • Gerald Willmann

Abstract

In this paper we review the literature on Pareto gains from trade. We start by discussing the distributional implications of trade which arise in the general heterogeneous agents case. We present the proof of Pareto gains from trade using lumpsum redistribution, followed by the same result with commodity taxation. Newer results involving non-linear taxation, in particular the special case of a duty free zone, are also discussed. Finally, we address the distributional effects of trade in the presence of increasing returns to scale and love of variety.

Suggested Citation

  • Giovanni Facchini & Gerald Willmann, 2001. "Pareto Gains from Trade," Economia politica, Società editrice il Mulino, issue 2, pages 207-216.
  • Handle: RePEc:mul:jb33yl:doi:10.1428/2005:y:2001:i:2:p:207-216
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    Cited by:

    1. Willmann, Gerald, 2004. "Pareto gains from trade: a dynamic counterexample," Economics Letters, Elsevier, vol. 83(2), pages 199-204, May.
    2. Ramya Vijaya, 2007. "Trade, Job Losses and Gender: A Policy Perspective," Forum for Social Economics, Springer;The Association for Social Economics, vol. 36(2), pages 73-85, October.
    3. Carlo Devillanova & Michele Maio & Pietro Vertova, 2010. "Labour mobility and the redistributive effects of trade integration," Journal of Economics, Springer, vol. 100(2), pages 95-115, June.
    4. Debaere, Peter & Glaser, Toni & Willmann, Gerald, 2015. "Choosing between Protectionism and Free Trade in an Uncertain World," CEPR Discussion Papers 10625, C.E.P.R. Discussion Papers.
    5. Blanchard, Emily & Willmann, Gerald, 2011. "Escaping a protectionist rut: Policy mechanisms for trade reform in a democracy," Journal of International Economics, Elsevier, vol. 85(1), pages 72-85, September.
    6. Nyhodo, Bonani & Punt, Cecilia & Vink, Nick, 2009. "The potential impact of the Doha Development Agenda on the South African economy: liberalising OECD agriculture and food trade," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 48(1), March.
    7. Carlo Devillanova & Michele Di Maio & Pietro Vertova, 2006. "Labour Mobility, Capital-Skill Complementarity and the Redistributive Effects of Trade Integration," KITeS Working Papers 188, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2006.

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