Chambers, Robert G. and Melkonyan, Tigran A. (2007) Pareto optimal trade in an uncertain world : GMOs and the Precautionary Principle. American Journal of Agricultural Economics, 89 (2). pp. 520-532. doi:10.1111/j.1365-2966.2007.01015.x

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Abstract

Optimal trade policy in an uncertain world is examined. Decision-maker attitudes toward uncertainty are represented in terms of the Gilboa-Schmeidler (1989) maximin expected-utility (MMEU) model. The central result is that in a two-country, general-equilibrium setting with both trading partners possessing an MMEU preference structure, Pareto optimality can require one trading partner to absorb all uncertainty in the economy if its set of priors is a subset of its trading partners. An immediate corollary is that autarky is Pareto optimal if the trading partner with the more inclusive set of priors either chooses or is endowed with a nonstochastic technology.

Item Type:	Journal Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH):	Commercial policy -- Econometric models, Transgenic organisms -- Economic aspects, Precautionary principle
Journal or Publication Title:	American Journal of Agricultural Economics
Publisher:	Wiley-Blackwell Publishing, Inc.
ISSN:	0002-9092
Official Date:	2007
Dates:	Date Event 2007 Published 1 February 2005 Submitted 1 May 2006 Accepted
Volume:	89
Number:	2
Page Range:	pp. 520-532
DOI:	10.1111/j.1365-2966.2007.01015.x
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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