A welfare ranking of alternative commercial policies is constructed for the mobile capital Harris-Todaro economy. It is sh own that, despite the presence of unemployment, most noninterventioni st policies suggested by the competitive model of gains from trade ca rry over to the mobile capital...

Increasing returns of the international kind as opposed to the usual national kind do not justify subsidies by a small country. Copyright 2002 by The London School of Economics and Political Science

In this paper, the authors analyze the factors determining the pattern of trade between underemployed economies. They find, among other things, that a low-wage, land-abundant country exports the land-using, labor-intensive product to a high-wage, capital-abundant country. The authors also find...

This paper investigates optimal trade policies for a small open economy with unemployment. When factor prices are rigid, random foreign prices result in random unemployment of resources. The ranking of second-best policies is investigated. If the marginal propensity to consume the importable is...