The Le Châtelier Principle in the Theory of International Trade

This paper shows in a general framework the broad applicability of the Le Chatelier Principle in international trade theory and policy. By stressing the formal similarity between a small open economy and a price taking multi-product firm, the paper generalises earlier applications of the Le Chatelier Principle in the trade literature. In addition, it is shown how some of the Le Chatelier results, which in their established form are locally valid only, can be generalized to discrete parameter changes.