Appraising the Options for International Trade in Services
This paper considers an economy that has the option of opening up its service sector to international trade at either the factor or the product level. Assuming nonidentical technologies in the context of a competitive, specific-factors framework, the paper shows that opening up trade always results in welfare gains, but that the extent of the welfare gain, and consequential adjustments in output and income distribution, depend crucially on whether trade occurs at the product or the factor level. Both factor endowments and the degree of technological comparative advantage or disadvantage play a role in determining the preferred level for trade. Copyright 1990 by Royal Economic Society.
Volume (Year): 42 (1990)
Issue (Month): 4 (October)
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