Trade policy

Technology

Autarky

Free Trade

Gains from Trade

= VT/VA

Prod

Cons

Wine Price^b

Total value^c (VA)

Prod

Cons

Wine Price^b

Total value^c (VT)

Convex technology

r = 0

s = 1 (Ricardo’s example)

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0

C_E: 2.2

W_P: 2.125

C_P: 0

w_E: 1.141

c_E: 1.016

w_P: 0.984

c_P: 1.184

E: 1.069

P: 1.069

4.472

1.093

r = −0.1

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0.384

C_E: 1.690

W_P: 1.666

C_P: 0.365

w_E: 1.101

c_E: 0.949

w_P: 0.950

c_P: 1.106

E: 1.034

P: 1.034

4.177

1.021

r = −0.3

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0.766

C_E: 1.261

W_P: 1.252

C_P: 0.758

w_E: 1.083

c_E: 0.933

w_P: 0.935

c_P: 1.086

E: 1.033

P: 1.033

4.104

1.003

r = −0.5

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0.857

C_E: 1.158

W_P: 1.153

C_P: 0.853

w_E: 1.080

c_E: 0.929

w_P: 0.931

c_P: 1.082

E: 1.033

P: 1.033

4.089

1.0001

Non-convex technology

r = 0.1

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0

C_E: 2.401

W_P: 2.310

C_P: 0

w_E: 1.240

c_E: 1.109

w_P: 1.070

c_P: 1.292

E: 1.073

P: 1.073

4.881

1.193

r = 0.3

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0

C_E: 3.081

W_P: 2.932

C_P: 0

w_E: 1.574

c_E: 1.423

w_P: 1.358

c_P: 1.658

E: 1.085

P: 1.085

6.262

1.531

r = 0.5

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0

C_E: 4.787

W_P: 4.468

C_P: 0

w_E: 2.399

c_E: 2.211

w_P: 2.069

c_P: 2.576

E: 1.106

P: 1.107

9.731

2.380

r = 0.7

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0

C_E: 12.32

W_P: 11.02

C_P: 0

w_E: 5.914

c_E: 5.693

w_P: 5102

c_P: 6.630

E: 1.155

P: 1.155

25.05

6.125

r = 0.9

s = 1

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 0

C_E: 229.6

W_P: 176.1

C_P: 0

w_E: 94.52

c_E: 106.1

w_P: 81.54

c_P: 123.5

E: 1.347

P: 1.347

466.7

114.1

Scale effects:

r = 0,

any s > 0

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.20

P: 0.889

4.089

W_E: 1

C_E: 1

W_P: 1

C_P: 1

w_E: 1

c_E: 1

w_P: 1

c_P: 1

E: 1.069

P: 1.069

4.472

1.093