Sunday, April 29, 2007

Free Trade and Prices

Free Trade and Prices

Just in time for our chapter on international trade, a couple of economists are looking at the effect of trade on consumer prices. Have a look (be sure to follow the links) and draw your own conclusions.

I would point out that while entrepreneurship is incredibly mobil, physical capital is very mobil and labor is increasingly mobil, that the remaining factor of production, Land and Natural Resources is not. This changes things slightly when we're dealing with stuff like oil and copper.

All in all, I'm inclined to agree with Tyler Cowen that the real gain from trade is the increased output.

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