Lump-sum transfer rules to redistribute the gains from free trade are examined. When individuals anticipate that free trade policy will come with a lump-sum transfer, they are going to change their behaviors under autarky in order to get larger transfers. In spite of this falsification, can a lump-sum transfer still make everyone enjoy the gains from free trade? In a model of simple exchange economy, a condition under which a lump-sum transfer can make it was found, but in general it is difficult to achieve Pareto-improving gains from free trade.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.