Trade with Non-Traded Goods

The Anatomy of Inter-Connected Markets

Datos Bibliográficos

ID9725484
AutoresRonald W Jones (autor de correspondencia)
Año1974
Volumen41
Número162
Páginas121
Fecha de publicación1974-05-01
Peer ReviewedSí
Open AccessNo
TipoARTICLE
RevistaEconomica (JOURNAL)
Identificadores de la revistaISSN: 0013-0427 • E-ISSN: 1468-0335
EditorialJSTOR (PUBLISHER)
DOI10.2307/2553762
OpenAlexW2084340297
IdiomaEN
Citas recibidas6
Referencias citadas1

in which each of two countries produces two tradeable commodities, with the international terms of trade representing the single relative price in the system. (I am ignoring the underlying factor markets. The entire analysis of this paper presupposes some standard set of assumptions, such as those of the Heckscher-Ohlin model, that guarantees bowed-out transformation schedules.) Although it is not difficult to set up more complex trade models with many commodities (and perhaps many countries), it is quite another thing to achieve readily understandable stability conditions and comparative statics results. In this paper I develop a model that is only slightly more complex than the standard two-commodity model. It is a three-commodity model, with appropriate simplifying assumptions made so that the analytical building blocks familiar from the standard two-by-two model are allowed easy visibility. The third commodity represents a category of goods that is prevented by high transport costs from entering into international trade. With this addition the model becomes complete in the sense of covering all categories of commodities according to their tradedness. A commodity either represents an exportable, an importable or neither. Non-traded commodities must have their markets cleared locally, and in this respect differ fundamentally from traded commodities, for which local excess demands or supplies can be accommodated in world markets. The most general treatment of a trade model with non-traded goods in the literature has been provided by Ian McDougall (1970), based in part on earlier work by Pearce (1961), McDougall (1965) and Komiya (1967). The model in the present paper is considerably more simple by virtue of the assumption that residents in each country have no effective demand for the commodity which that country exports and produce no commodity similar to the one being imported. Such an assumption may indeed have some relevance to those underdeveloped countries for which such a pattern of specialization in consumption and production

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