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Preferential Trading Theory: The n Commodity Case

Journal of Political Economy 1979 87(2), 315-331
This is a general equilibrium analysis of preferential trading. A method was developed which allows the analysis of the many-good case and which suggests the tools for empirical studies. It is shown that increasing the number of commodities beyond two introduces new considerations. It is, however, always possible to identify welfare-increasing tariff changes. The study analyzes the inter-relationship between preferential trading and a unilateral movement to free trade. The effect of a customs union on income distribution among union members is emphasized.

Preferential Trading Theory: The n Commodity Case

Journal of Political Economy 1979 87(2), 315-331
This is a general equilibrium analysis of preferential trading. A method was developed which allows the analysis of the many-good case and which suggests the tools for empirical studies. It is shown that increasing the number of commodities beyond two introduces new considerations. It is, however, always possible to identify welfare-increasing tariff changes. The study analyzes the inter-relationship between preferential trading and a unilateral movement to free trade. The effect of a customs union on income distribution among union members is emphasized.