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A Welfare Decomposition in Quasi-Linear Economies

Author

Listed:
  • Taiji Furusawa

    (Hitotsubashi University)

  • Hideo Konishi

    (Boston College)

Abstract

We propose a decomposition of social welfare when consumers' preferences are described by quasi-linear utility functions. In our decomposition, social welfare is expressed as the sum of consumers' gross utilities and trade surplus of non-numeraire goods, whose consumption enters utility functions non-linearly. This decomposition is useful especially when we assess the impact of trade liberalization on individual countries. We propose a decomposition of social welfare when consumers' preferences are described by quasi-linear utility functions. In our decomposition, social welfare is expressed as the sum of consumers' gross utilities and trade surplus of non-numeraire goods, whose consumption enters utility functions non-linearly. This decomposition is useful especially when we assess the impact of trade liberalization on individual countries.

Suggested Citation

  • Taiji Furusawa & Hideo Konishi, 2003. "A Welfare Decomposition in Quasi-Linear Economies," Boston College Working Papers in Economics 569, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:569
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    References listed on IDEAS

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    1. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    2. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    3. Bagwell, Kyle & Staiger, Robert W., 2001. "Reciprocity, non-discrimination and preferential agreements in the multilateral trading system," European Journal of Political Economy, Elsevier, vol. 17(2), pages 281-325, June.
    4. Paul R. Krugman, 1991. "The move toward free trade zones," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 7-58.
    5. Glenn W. Harrison & Thomas F. Rutherford & Ian Wooton, 1993. "An Alternative Welfare Decomposition for Customs Unions," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 961-968, November.
    6. Kowalczyk, Carsten, 2000. "Welfare and Integration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 483-494, May.
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    Cited by:

    1. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    2. Yanase, Akihiko & Tsubuku, Masafumi, 2022. "Trade costs and free trade agreements: Implications for tariff complementarity and welfare," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 23-37.
    3. Yang, Yichen & Liu, Wen, 2024. "Free trade agreements and domestic value added in exports: An analysis from the network perspective," Economic Modelling, Elsevier, vol. 132(C).
    4. Taiji Furusawa & Hideo Konishi, 2005. "Free Trade Networks With Transfers," The Japanese Economic Review, Japanese Economic Association, vol. 56(2), pages 144-164, June.
    5. Monika Mrazova, 2009. "Trade negotiations when market access matters," Economics Series Working Papers 447, University of Oxford, Department of Economics.
    6. Fujiwara, Kenji, 2008. "A decomposition of gains from trade in a differentiated oligopoly," Japan and the World Economy, Elsevier, vol. 20(3), pages 326-337, August.
    7. Masafumi Tsubuku, 2018. "Impacts of globalization on tariff settings," International Economics and Economic Policy, Springer, vol. 15(1), pages 117-129, January.

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    More about this item

    Keywords

    social welfare; GATT think; quasi-linear utility;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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