Trade Gains when the Opportunity to Trade Changes the State of Information |
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| Authors: | Murray C Kemp Koji Shimomura & Henry Y Wan |
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| Institution: | University of New South Wales, Sydney 2052, Australia,;RIEB, Kobe University, Rokkodai, Nada, Kobe 657, Japan,;Cornell University, Ithaca, New York 14850-1916, USA |
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| Abstract: | J. S. Mill suggested that the destruction of old preferences and their replacement by new are among the greatest benefits imparted by free trade. However, Mill's argument relied on a possibly controversial ethical judgment. The present note approaches the question posed by Mill with only the conventional Paretian ethical baggage, and shows that, if all agents are rational in a sense to be made clear and if the wellbeing of each agent is independent of irrelevant alternatives, then trade is potentially gainful. |
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