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The Rise and Fall of Normative Trade Theory

  • Murray C. Kemp
  • Geoffrey Fishburn
Chapter
Part of the New Frontiers in Regional Science: Asian Perspectives book series (NFRSASIPER, volume 26)

Abstract

Three core normative propositions of the theory of international trade have been established in the context of finite competitive economies of the Walras−Arrow−Debreu or McKenzie (WADM) type. Whether the propositions survive the recognition that economies might last forever, with overlapping generations (OLGs) of mortal individuals and intergenerational bequests, is still unknown. In the present chapter, it is shown that none of the core propositions survives the recognition of intergenerational bequests. It is also noted that, if a particular tailor-made assumption is introduced, all three propositions survive.

Keywords

International trade Normative propositions Finite economies Overlapping generations Bequests 

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Copyright information

© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  • Murray C. Kemp
    • 1
  • Geoffrey Fishburn
    • 2
  1. 1.School of EconomicsUNSW SydneySydneyAustralia
  2. 2.Independent ResearcherSydneyAustralia

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