The gains from trade and refusal to trade

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

1 Scopus citations


Purpose - Instances of refusal to trade stand in contrast to the theorems on the gains from trade. Two paradigms, second-best and political economy, have been used to explain refusal to trade. Murray Kemp (1962) provided a foundation for the political economy paradigm when he noted that, in the absence of lump-sum redistribution, the theorems on the gains from trade are ''true but irrelevant''. This chapter takes Murray Kemp's observation as a point of departure for a consideration of the relation between individual and group gains from trade. Paradigms in explaining refusal to trade are distinguished. Methodology/Approach - This chapter examines ideas underlying explanations for refusal to participate in international trade. Findings - Two different approaches are identified in modeling and explaining why the gains from trade are compromised by refusal of governments to allow free trade. The second-best approach suggests a justification for refusal to trade while the political economy approach with public-choice foundations proposes an explanation. Practical implications - Ideology expressed in how governments are viewed can influence economic analysis.

Original languageEnglish
Title of host publicationGlobalization and Emerging Issues in Trade Theory and Policy
PublisherEmerald Group Publishing Ltd.
Number of pages16
ISBN (Print)9781846639623
StatePublished - 2008

Publication series

NameFrontiers of Economics and Globalization
ISSN (Print)1574-8715


  • Gains from trade
  • MURRAY Kemp
  • Political economy
  • Second-best


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