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Existence of Equilibriuim in Welfare-enhancing Free Trade Areas

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dc.contributor.author Grinols, Earl L.
dc.contributor.author Silva, Peri A.
dc.date.copyright September 2004 en
dc.date.copyright September 2004
dc.identifier.uri http://hdl.handle.net/2104/316
dc.description.abstract Proving the existence of equilibrium having specified properties is often synonymous with proving the result in trade theory. The Grandmont-McFadden proposition that any autarkic allocation can be replaced by a Pareto superior free trade equilibrium involving domestic transfers only depends on an existence proof, for example. Comparable proofs for free trade areas have not been provided to date because unharmonized tariffs imply goods prices that vary by member country and require potentially complicated rules of origin that block standard proofs. This paper fills this gap by providing the missing proof that starting from an arbitrary world trade equilibrium, a free trade area equilibrium can be found involving domestic transfers only that is at least as satisfactory for every consumer as the original allocation. en
dc.relation.ispartofseries BaylorBusiness Economics: Working Papers Series en
dc.relation.ispartofseries 2004-51-ECO en
dc.subject Walrasian Equilibrium en
dc.subject Free Trade Areas en
dc.subject Rules of Origin en
dc.subject Welfare Analysis en
dc.subject JEL Classification: D60 en
dc.subject JEL Classification: F13 en
dc.subject JEL Classification: F15 en
dc.title Existence of Equilibriuim in Welfare-enhancing Free Trade Areas en
dc.type Working Paper en


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