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A Neoclassical View of Trade Liberalization

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  • Karp, Larry S.

Abstract

This paper attempts to provide a balanced view of the neoclassical economists' perspective on trade liberalization, with an emphasis on the agricultural sector. I review the basic arguments in favor of competitive markets in general and free trade in particular. These arguments are based on restrictive assumptions which often fail to hold. Under more realistic assumptions, the arguments in favor of free trade are invalid. Economists remain skeptical of the benefits of trade restrictions, but this is a nuanced judgment, rather than a theoretical certainty. I describe a number of situations where market failures imply that trade restrictions can improve efficiency.

Suggested Citation

  • Karp, Larry S., 1997. "A Neoclassical View of Trade Liberalization," CUDARE Working Papers 6242, University of California, Berkeley, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucbecw:6242
    DOI: 10.22004/ag.econ.6242
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    File URL: https://ageconsearch.umn.edu/record/6242/files/wp970856.pdf
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    References listed on IDEAS

    as
    1. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    2. John Beghin & Larry S. Karp, 1992. "Tariff Reform in the Presence of Sector-Specific Distortions," Canadian Journal of Economics, Canadian Economics Association, vol. 25(2), pages 294-309, May.
    3. Karp, Larry & Paul, Thierry, 1994. "Phasing In and Phasing Out Protectionism with Costly Adjustment of Labour," Economic Journal, Royal Economic Society, vol. 104(427), pages 1379-1392, November.
    4. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    5. David M. G. Newbery & Joseph E. Stiglitz, 1984. "Pareto Inferior Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 1-12.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    International Relations/Trade;

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