Free Trade and Its Alternatives

Sven W. Arndt

in The Oxford Handbook of International Commercial Policy

Published in print May 2012 | ISBN: 9780195378047
Published online September 2012 | | DOI:

Series: Oxford Handbooks

Free Trade and Its Alternatives

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This article begins by reviewing the basic case for free trade in terms of the workhorse factor-proportions model. The conclusions of this “benchmark” model are then stress-tested by removing each of the key assumptions in turn. Not surprisingly, the case for free trade becomes less airtight, as a variety of specific market situations arises in which trade-based barriers such as tariffs or nontrade interventions such as production and other subsidies can produce superior welfare outcomes. But these theoretical findings of superiority do not necessarily translate into interventionist policy prescriptions, because in many cases the costs associated with practical implementation may exceed the expected benefits.

Keywords: free trade; workhorse factor-proportions model; trade barriers; trade policy

Article.  12956 words. 

Subjects: Economics ; International Economics ; Public Economics

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