The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Nilüfer Çağatay
Reference work entry


The orthodox approach to international trade assumes full employment of a given amount of resources in the world economy. Within this framework, free trade (with certain exceptions such as the optimum tariff argument) is viewed to bring about the most efficient international division of labour, thereby maximizing world output as well as the output of individual trading economies. A corollary to this argument is that, in general, interferences with the process of free trade leave both the intervening country and its trading partners as a whole worse off compared to the free trade situation.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Nilüfer Çağatay
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