ABSTRACT

Even though classical, neoclassical, and every school of postclassical economists have long emphasized that nations can gain from an expanding volume of world trade, in the last years of the 1970s many sectors of national economies—including agriculture—were once again becoming more protectionist. In view of that fact, this chapter will examine the arguments supporting the free-trade doctrine in the context of major theoretical developments in the gains from trade literature. The classical writings on the issue are voluminous. They have been excellently appraised, however, making it possible to present the essential foundations with comprehensive brevity. 1 Most of the focus will be on the normative aspects of neoclassical trade theory, and only the standard results will be considered. The many paradoxes in modern trade theory are discussed in a companion chapter. 2