Trade causing net loss
Thanks, Pernille, for your comment, which is a very useful reminder of the fact that there are many other different equilibrium conditions that, in general, cannot be directly analysed with TIMES, such as Cournot equilibrium, Nash equilibrium, Stackelberg equilibrium etc.

I agree with all the points you made. However, I think your comment does not actually address the original question about trade causing a net loss in TIMES (or my confusion about it).

Both the original question and my reformulation of it could be summarized as follows:  What should a TIMES user do (if anything) in order to ensure that a trade between two regions will show a net benefit for both regions in the TIMES solution, when compared to the non-trading case?

Economic textbooks state that under so-called competitive equilibrium all possible mutually beneficial gains from trade are exhausted, which in my understanding also means that the trades are Pareto efficient. And by definition, a Pareto efficient economic transaction leads to a net gain, without anyone being made worse off.  

Therefore, would it be possible to conclude that if the TIMES equilibrium can be qualified as a competitive equilibrium, we could be assured that there is no net loss from trade to either region?  Any further insight to this question would reduce my confusion...

Messages In This Thread
Trade causing net loss - by Antti-L - 30-07-2017, 11:08 PM
RE: Trade causing net loss - by Pernille.S - 31-07-2017, 05:05 PM
RE: Trade causing net loss - by Antti-L - 31-07-2017, 11:27 PM

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