Paul Samuelson's (1952, 1954) classic papers on the transfer problem addressed two separate analytical issues: the "positive" effect of a transfer on the terms of trade; and the welfare effect of the transfer on the donor and the recipient.
Since then, a considerable body of literature has grown up on the positive analysis. While Samuelson (1954) himself had extended the 2 X 2 X 2 free trade analysis to allow for tariffs and transport costs, subsequent writers have analyzed other extensions of the model: for example, to allow for nontraded goods as with leisure in Samuelson (1971); or general nontraded goods in John Chipman (1974) and Ronald Jones (1970, 1975).
Economics | International Economics | Law
Jagdish N. Bhagwati, Richard A. Brecher & Tatsuo Hatta,
The Generalized Theory of Transfers and Welfare: Bilateral Transfers in a Multilateral World,
Am. Econ. Rev.
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