An adverse social welfare effect of a doubly gainful trade

Arbeitspapier

Acknowledging individuals’ distaste for low relative income renders trade less appealing when trade is viewed as a technology that integrates economies by merging separate social spheres into one. We define a “trembling trade” as a situation in which gains from trade are overtaken by losses of relative income, with the result that global social welfare is reduced. A constructive example reveals that a “trembling trade” can arise even when trade is doubly gainful in that it increases the income of every individual and narrows the income gap between the trading populations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEF Discussion Papers on Development Policy ; No. 260

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Size and Spatial Distributions of Regional Economic Activity
• Subject: Gains from trade ; Increase of incomes ; Decrease of income gap ; Integration ; Change of social space ; Low relative income ; Social welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stark, Oded ; Zawojska, Ewa ; Kohler, Wilhelm ; Szczygielski, Krzysztof
• Event: Veröffentlichung
• (who): University of Bonn, Center for Development Research (ZEF)
• (where): Bonn
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/191779
• Last update: 10.03.2025, 11:42 AM CET