This paper argues that labor market distortions in transition and developing economies help explain differential impacts of trade liberalization. We assume that workers differ in ability. In a market economy their earnings depend on their ability. However, earnings are independent of ability due...

This paper argues that labor market distortions in transition and developing economies help explain differential impacts of trade liberalization. We assume that workers differ in ability. In a market economy their earnings depend on their ability. However, earnings are independent of ability due...

The paper first demonstrates that in a simple asymmetric n-country world with Cournot competition, constant returns and linear demand, free trade can reduce world welfare as well as total output and consumer surplus. We then derive precise conditions for free trade to raise a country's welfare,...