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A note on redistributions and gains from trade

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  • Cordella, Tito
  • Ventura, Luigi

Abstract

It is a well known result that through national lump sum taxes and transfers everybody can gain from international trade. This is always the case when domestic lump sum tax and transfers are implemented before trade. This brief note points out that if domestic transfers are possible only after trade it may well happen that some agents' losses can no longer be compensated. This simple reasoning helps make the case for supra-national political and economical institutions.
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  • Cordella, Tito & Ventura, Luigi, 1992. "A note on redistributions and gains from trade," Economics Letters, Elsevier, vol. 39(4), pages 449-453, August.
    • Handle: RePEc:eee:ecolet:v:39:y:1992:i:4:p:449-453
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    Cited by:

    1. Murray C. Kemp & Koji Shimomura, 2002. "Recent Challenges to the Classical Gains–from–Trade Proposition," German Economic Review, Verein für Socialpolitik, vol. 3(4), pages 485-489, November.

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