Some Refinements of the Orthodox Theory

  • Giancarlo Gandolfo


Explicitly or implicitly, all the theoretical models examined so far, have a common set of assumptions: perfect competition, the rigid supply of productive factors, absence of intermediate goods, absence of transport costs, certainty, absence of illegal trade (such as smuggling), and so on. These are undoubtedly assumptions which do not correspond to reality, so that it is legitimate to ask what happens when they are dropped. In this chapter we shall be concerned with the introduction of those elements which can be dealt with from inside the orthodox theory, of which they are in fact a refinement1. In the next chapter we shall examine the consequences of introducing non-competitive elements and other alternative explanations of international trade, which can be fitted only partially (if at all) into the framework of orthodox theory.


International Trade Relative Price Final Good Intermediate Good Perfect Competition 
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Copyright information

© Springer-Verlag Berlin Heidelberg 1986

Authors and Affiliations

  • Giancarlo Gandolfo
    • 1
  1. 1.Faculty of Economics and CommerceUniversity of RomeRomeItaly

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