The authors develop an "intertemporal," two-period, two-sector, specific factor model, characterized by generalized wage differentials, and show that a number of pathological results in the domestic distortions literature are all but eliminated. In this model, in contrast to the standard...

In an economy with an external increasing returns technology and a convex production set, international capital mobility reduces the shadow price of foreign exchange if quotas or voluntary export restraints are in force, but leaves this shadow price unaltered if tariffs are in place.

In this paper, the authors present complete characterizations of the compensation tests for potential Pareto superiority proposed by Kaldor, Hicks, and Samuelson in terms of the aggregate Hicksian measures of income compensation, including compensating and equivalent variations. The key to...