ABSTRACT OF PAPER
Title: Gains from trade: pre-classical, classical and post-classical views
Author: MANESCHI Andrea
Gains from trade: pre-classical, classical and post-classical views by Andrea Maneschi (Vanderbilt University) The gains from trade have figured prominently in discussions of the rationale for international trade since mercantilist times, and typically led economists to argue for trade liberalization or even free trade, except when they wished to promote infant industries or exploit monopoly power by turning the terms of trade in a country’s favor. Attempts to describe and quantify the gains from trade began with Henry Martyn in 1701, continued with Adam Smith and David Ricardo, and culminated with neoclassical economists measuring them by means of the compensating and equivalent variations. Following the lead of Montesquieu, a succession of writers such as David Hume, Smith, Ricardo and John Stuart Mill argued for a broader vision of the gains from trade that include the civilizing effects of trade and interdependence, the dynamic benefits realized from the imitation of foreign commodities and technical improvements, the positive effects on a country’s national income of other countries’ prosperity. Since the 1970s dynamic gains were also stressed by exponents of the “new trade theory”, for whom an important additional gain from trade is the availability to consumers of a greater variety of commodities. My aim in this paper is to trace the varying interpretations of gains from trade from mercantilist times to the present, and to place our current understanding of gains from trade in the context of how these were appraised in the past in order to gauge the intellectual progress achieved by the economics profession and trade economists in particular over the past three centuries.
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