The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

International Trade Theory

  • James E. Anderson
Reference work entry


International trade theory provides explanations for the pattern of international trade and the distribution of the gains from trade. The theory convinces most economists of the benefits of liberal trade. But many non-economists oppose liberal trade. Opponents include some who may have encountered trade theory but nevertheless fall prey to fallacious reasoning. This article attempts to convey why trade theory is so persuasive to economists and also to deal with why many non-economists are not persuaded.


Absolute advantage Adjustment costs Autarky Bilateral trade Comparative advantage Comparative labour productivity advantage Competitive advantage Consumption taxation Economic theory of gravity Economies of scale Endogenous advantage External budget constraint Factor immobility Factor proportions theory Free trade Gains from trade General equilibrium trade model Heckscher–Ohlin trade theory Imperfect competition Information limitations International trade theory Lump-sum transfers Monopolistic competition Multilateral resistance Multiple equilibria Partial equilibrium Product variety Productivity shocks Protection Ricardian trade theory Substitution effect 

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • James E. Anderson
    • 1
  1. 1.