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An adverse social welfare effect of a doubly gainful trade

Author

Listed:
  • Stark, Oded
  • Zawojska, Ewa
  • Kohler, Wilhelm
  • Szczygielski, Krzysztof
Abstract
Acknowledging individuals’ distaste for low relative income renders trade less appealing when trade is viewed as a technology that integrates economies by merging separate social spheres into one. We define a “trembling trade” as a situation in which gains from trade are overtaken by losses of relative income, with the result that global social welfare is reduced. A constructive example reveals that a “trembling trade” can arise even when trade is doubly gainful in that it increases the income of every individual and narrows the income gap between the trading populations.

Suggested Citation

  • Stark, Oded & Zawojska, Ewa & Kohler, Wilhelm & Szczygielski, Krzysztof, 2018. "An adverse social welfare effect of a doubly gainful trade," Discussion Papers 273147, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:273147
    DOI: 10.22004/ag.econ.273147
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    Cited by:

    1. Oded Stark & Wiktor Budzinski, 2021. "A social‐psychological reconstruction of Amartya Sen’s measures of inequality and social welfare," Kyklos, Wiley Blackwell, vol. 74(4), pages 552-566, November.
    2. Stark, Oded & Kosiorowski, Grzegorz, 2020. "An Adverse Social Welfare Effect of Quadruply Gainful Trade," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 24(3), pages 207-235, September.

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    More about this item

    Keywords

    Financial Economics; International Relations/Trade;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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