Arbitrage, Mobility, and Equilibrium Prices
Abstract
This chapter explores the implications of a world in which economic agents maximize profits and their economic well-being, where goods and services and factors of production are free to move across national borders without facing any impediment or “transportation costs.” The analysis focuses on the market clearing process, which leads to the identification of global and national equilibrium prices. Then the analysis is extended to include transportation costs, different degrees of factor mobility effects on the equilibrium, the relative prices between two commodities, and the terms of trade between two economies. The process yields several insights, which we use to examine the impact ...
Get Economic Disturbances and Equilibrium in an Integrated Global Economy now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
