The Voluntary (Private) Production of Public Goods, the Gains from Trade and Comparative Advantage
REVIEW OF INTERNATIONAL ECONOMICS
Posted: 8 Nov 1996
Any (finite) number of privately produced public goods are incorporated into a general trade-theoretic model of private goods and factors. Postulating Cournot-Nash behavior a necessary condition for gainful trade is derived. Potential trade gains are related to the law of comparative advantage in private goods and the change in the underproduction ofpublic goods. A sufficient condition is also proven. Trade gains/losses are compared for more or less populous economies. All the results have analogues in the literature on imperfect competition and/or increasing returns to scale.
JEL Classification: F13
Suggested Citation: Suggested Citation