Lectures on International Trade, second edition

by Jagdish N. Bhagwati, Arvind Panagariya, T. N. Srinivasan

Overview

The greatest strength of this thoroughly revised and expanded edition of Lectures on International Trade is its rigorous algebraic and geometric treatment of the various models and results of trade theory. The authors, who now include Arvind Panagariya, offer both policy insights and empirical applications. They have added nine entirely new chapters as well as new sections to several existing chapters (e.g., a greatly expanded treatment of the growing theory of preferential trade agreements).

Product Details

ISBN-13:	9780262522472
Publisher:	MIT Press
Publication date:	09/28/1998
Series:	The MIT Press
Edition description:	second edition
Pages:	614
Product dimensions:	6.94(w) x 10.06(h) x 1.25(d)
Age Range:	18 Years

About the Author

Jagdish N. Bhagwati is University Professor of Economics, Law, and International Relations at Columbia University and former Adviser to the Director General of GATT, Arthur Dunkel. He is the author (with Arvind Panagariya) of Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries.

Arvind Panagariya is Vice Chairman, NITI Aayog (National Institution for Transforming India), Government of India, and Professor of Economics in the School of International and Public Affairs at Columbia University.

T.N. Srinivasan is Samuel C. Park Jr. Professor of Economics at Yale University.

Table of Contents

Preface to the Second Edition
1 Introduction
1.1 Pure Theory of Trade
1.2 Distinguishing Features of International Trade Theory
1.3 Positive and Normative Aspects
1.4 Organization of the Volume
1.5 Standardized Notation
I THEORIES OF INTERNATIONAL TRADE
2 Model and Analytic Relationships in Ricardian
Theory
2.1 Ricardian Model
2.2 Supply Relations
2.3 SelfSufficiency Equilibrium
2.4 Trade Equilibrium and Offer Curves
2.5 TradeIndifference Curves
2.6 Formal Notes on the Ricardian Model
3 Ricardian Theory and the Pattern of Trade
3.1 Alternative Demand Assumptions
3.2 Weaker Formulation of Ricardian Theorem
4 Some EXtensions of Ricardian Theory
4.1 Multiple Countries
4.2 Multiple Goods
4.3 Transportation Costs
4.4 Tariffs
4.5 Nontraded Goods
4.6 ContinuumofGoods Model
5 Model and Analytic Relationships under the
HeckscherOhlin Theory
5.1 HeckscherOhlin Model
5.2 Supply Relations
5.3 Competitive System
5.4 Depiction of FreeTrade Equilibrium
6 Pattern of Trade and the HeckscherOhlin Theory
6.1 HeckscherOhlin Theorem with Physical Definition of Factor
Abundance
6.2 HeckscherOhlin Theorem with Price Definition of Factor
Abundance
6.3 FactorPrice Equalization
7 SpecificFactors Model
7.1 SpecificFactors Model: Basic Analysis
7.2 Comparative Statics: A Change in Goods Prices
7.3 Comparative Statics: A Change in Factor Endowments
7.4 Interpreting the SF Model as the ShortRun Version of the 2X2
Model
7.5 Source of Factor Specificity and the Choice of a Model
8 Generalizations and Empirical Verification of the
HeckscherOhlin Theory
8.1 Many Goods, Two Factors
8.2Two Goods, Many Factors
8.3 Many Goods and Many Factors
8.4 Empirical Verification of the HeckscherOhlin Theory
9 Dual Approach: Basic Tools
9.1 Envelope Theorem and Envelope Function
9.2 UnitCost Function
9.3 Revenue Function
9.4 EXpenditure Function
9.5 Equilibrium
9.6 Trade Elasticities and Stability in a TwoGood Model
10 Mathematical Analysis of the 2X2 and 2X3 Models
10.1 The 2X2 Model
10.2 The 2X3 SpecificFactors Model
10.3 Dynamic Adjustment with Adjustment Costs
11 Economies of Scale
11.1 Models of Perfect Competition
11.2 Models of Monopolistic Competition
II TRADE INTERVENTIONS AND TRANSFERS
12 Tariffs and Trade Equilibrium
12.1 FreeTrade Version of the Classical Model
12.2 Effect of a Tariff on EXternal and Domestic Terms of Trade
12.3 Geometry of Tariffs
12.4 Metzler ParadoX
12.5 Some EXtensions: Metzler Production ParadoX
12.6 Lerner Symmetry Theorem
13 Tariffs versus Quotas
13.1 Equivalence Argument
13.2 Breakdown of Equivalence
13.3 An Alternative Question
13.4 Applications of Analysis to Other Forms of Tariffs and Quotas
14 Other Commercial Policy Instruments
14.1 Voluntary EXport Restraints
14.2 Voluntary Import EXpansions
14.3 Antidumping Actions
15 Effective Rate of Protection
15.1 Two Definitions
15.2 Predictive Power of ERP IndeXes
16 Transfer Problem
16.1 Direct Solution
16.2 TwoStage Derivation
16.3 Welfare Impact
16.4 Immiserizing Transfers: Other Models
16.5 Transfer Criteria in Other Models
III TRADE AND WELFARE IN AN OPEN ECONOMY
17 Principal Issues and Policy Instruments
17.1 Major Concepts and Distinctions
17.2 Alternative Policy Instruments and Hierarchy of Policies
18 Gains from Trade
18.1 Basic Theorem without Prices
18.2 Basic Theorem with Prices
18.3 Optimality of FreeTrade Policy for a Small Country
18.4 Optimality of Free Trade from World Viewpoint
18.5 Superiority of Trade over Autarky, without LumpSum Transfers
18.6 Illustrating the DiXitNorman Argument
19 Measuring Gains from Trade
19.1 Gains from Free Trade
19.2 Decomposing Gains from Trade
19.3 Factor Immobility
19.4 Other Considerations
20 Distortions: Departures from FreeTrade
Optimality
21 Monopoly Power in Trade
21.1 Optimal Policy Intervention
21.2 Tariff Level
21.3 Can the Optimal Tariff Be Negative?
21.4 Optimal Tariff Structure with Several Traded Goods
21.5 Retaliation or EXtortion
21.6 Ranking Alternative Policies
22 Production EXternalities
23 Monopoly in Production
23.1 Nontangency
23.2 Welfare Analysis
23.3 Gains from Trade
24 Monopsony
24.1 Positive Analysis of Monopsony Distortion
24.2 Welfare Implications
25 Wage Differentials
25.1 Nature of the Distortion
25.2 Analysis
26 Generalized Sticky Wages
26.1 OneGood Model with Sticky Wage
26.2 TwoGood Model with Factor Immobility
26.3 Generalized Sticky Wage with Full Factor Mobility in 2X2
Model
27 SectorSpecific Sticky Wages
27.1 HarrisTodaro Model
27.2 Policy Implications
27.3 Other EXtensions
28 Noneconomic Objectives
28.1 Different Objectives
28.2 Formal Mathematics of the Problem
28.3 Turning Noneconomic Objectives into Economic Objectives
29 Immiserizing Growth
29.1 Original Case
29.2 Immiserizing Growth for a Small Country with a Tariff
29.3 Generalized Theory
29.4 Two Caveats
29.5 Diverse Applications of ImmiserizingGrowth Theory
29.6 Algebra of the Bhagwati and the Johnson Cases
30 Imperfect Competition and Trade Policy
30.1 Oligopoly: Competition in the ThirdCountry Market
30.2 Oligopoly in TwoCountry Models
30.3 Monopolitic Competition
31 Uniform versus Preferential Tariff Reduction
31.1 Uniform Reduction
31.2 Preferential Reduction
31.3 Recent Static Analysis
31.4 Recent "Dynamic TimePath" Analyses
32 International Capital Flows
32.1 GoodsPrice Equalization: Turning FactorPrice Equalization
on its Head
32.2 Diversification with Different Technologies
32.3 Welfare Analysis: Inflows without Optimal Policy Intervention
32.4 Welfare Analysis: Optimal and SecondBest Interventions
32.5 Other WelfareTheoretic Questions
33 International Migration
33.1 Asymmetries
33.2 Choice between International Labor and Capital Mobility
33.3 Response to Import Competition
IV RECENT THEORETICAL DEVELOPMEMTS
34 Directly Unproductive ProfitSeeking (DUP)
Activities
34.1 Tariff Evasion
34.2 Revenue Seeking
34.3 Tariff Seeking
34.4 General Theory of DUP Activities
34.5 Price versus Quantity Distortions
35 Trade Reform
35.1 Normative Analysis
35.2 Positive Analysis
36 Growth and Welfare
36.1 Distortionary Situations
36.2 Optimal Policies Everywhere: Absence of Deadweight Loss under
Free Trade
36.3 Steady States, Trade, and Welfare
37 Endogenous Growth, Innovation, and Trade
37.1 Endogenous Growth and Trade
37.2 InnovationBased Growth and Technology Diffusion among
Countries
38 Shadow Prices for Project Selection in Open
Economies
38.1 "WorldPrice"Valuation Rule
38.2 Derivation of WorldPriceValuation Shadow Prices with Given
Distortion
38.3 Negative Shadow Prices
38.4 Other Issues and EXtensions
39 Uncertainty
39.1 Ricardian Model for Complete Set of Markets
39.2 Ricardian Model for Securities and Spot Markets
39.3 Ricardian Model for Equivalence of World Market with
Securities Market and with Complete Set of Markets
39.4 Models with an Incomplete Set of Markets
AppendiXes
A Alternative Elasticity Formulas
B Basic Results of the 2X2 Neoclassical Model of Trade
Theory
C Classical ComparativeStatics Model and Analytical
Relationships
IndeX

What People are Saying About This

Endorsement

A comprehensive treatment of both positive and normative tradetheory, this second edition includes new chapters on thespecific-factors model, economies of scale, strategic trade policy,and endogenous growth. Graduate students will appreciate the lucidwriting and the judicious mix of algebra and diagrams.—Gene Grossman, Jacob Viner Professor of International Economics, Princeton University

From the Publisher

"A comprehensive treatment of both positive and normative tradetheory,
this second edition includes new chapters on thespecific-factors model, economies of scale, strategic trade policy,and endogenous growth. Graduate students will appreciate the lucidwriting and the judicious mix of algebra and diagrams."
Gene Grossman , Jacob Viner Professor of International
Economics,Princeton University

The MIT Press

Gene Grossman

Gene Grossman, Jacob Viner Professor of International Economics, Princeton University

A comprehensive treatment of both positive and normative trade theory, this second edition includes new chapters on the specific-factors model, economies of scale, strategic trade policy, and endogenous growth. Graduate students will appreciate the lucid writing and the judicious mix of algebra and diagrams.