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An Experimental Investigation of the Patterns of International Trade

In: International Trade Agreements and Political Economy

Listed author(s):
  • CHARLES N. NOUSSAIR

    (Department of Economics, Krannert School of Management, Purdue University, West Lafayette, IN 47907, USA)

  • CHARLES R. PLOTT

    (Humanities and Social Sciences- m/c 228-77, California Institute of Technology, Pasadena, CA 91125, USA)

  • RAYMOND G. RIEZMAN

    (Department of Economics, College of Business Administration, W210 PBAB, University of Iowa, Iowa City, lA 52242, USA)

AbstractThis paper studies a laboratory economy with some of the prominent features of an international economic system. The patterns of trade and output predicted by the law of comparative advantage are observed evolving within the experimental markets. Market prices and quantities move in the direction of the competitive equilibrium, but the quantitative predictions of the (risk-neutral) competitive equilibrium are rejected. Considerable amounts of economic activity occur as disequilibria. Factor-price equalization is observed, but there is a universal tendency for factors of production to trade at prices below their marginal products.

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File URL: http://www.worldscientific.com/doi/abs/10.1142/9789814390125_0017
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This chapter was published in:
  • Raymond Riezman (ed.), 2013. "International Trade Agreements and Political Economy," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 8386, 04.
  • This item is provided by World Scientific Publishing Co. Pte. Ltd. in its series World Scientific Book Chapters with number 9789814390125_0017.
    Handle: RePEc:wsi:wschap:9789814390125_0017
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