In the article, “Is Free Trade Passé,” Paul Krugman summarizes and explains research that challenges, and presents alternatives to, the assumptions of classical trade theory based on comparative advantage. summarize positions that challenge the assumptions of constant returns and perfect competition (keeping in mind that empirical validation of trade theory requires only reasonable approximations to these conditions) and discuss the implications for classical trade optimism (the argument that free trade is always “a good thing”) and for trade policy and practice.
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