Not a Zero-Sum Game - Ludwig von Mises Institute

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PART 11 COMMENTS ON TRADE BETWEEN "COUNTRIES" Naturally, such a highly profitable activity won't last long TABLE II Prices with free trade Price relationship between a TV and a radio in each country -- 1.33 1.33 : I Sequence of events: Competition emerges, tending to drive prices toward the elimination of the discrepancy in price relationships, as shown in Table I. As competitors begin to purchase radios and sell TVs, the spread narrows and the purchasing power parity tends to settle near $1 : Y45. The prices that would tend to prevail in each country are shown in bold in the shaded boxes of Table II. *1,200 1 45 = $26.67 "20 x 45 = Y900 Thus price relationships become the same in each country: 1.33 : 1, as shown in Table II. $26.67 / $20 = 1.33 Y1.200 / Y900 = 1.33 People would purchase the items where the price is lower, as shown in shaded areas, regardless of origin.
The Politicization of Trade luctuations in trade (balance of trade) are always offset by F fluctuations in, for instance, capital flows, because the total account of the exchanges has to balance (balance of payments). The two most important factors that increase or decrease the supply and demand of foreign currencies (foreign exchange) are imports/exports and international capital flows (investments or credits). Proceeds from the total inflow and outflow of transactions (trade plus capital) necessarily tend to balance between the two parties, whether what is being exchanged are tangibles (e.g., merchandise) or intangibles (e.g., government bonds). An imbalance would mean that one of the parties is getting something for nothing.
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I I E ~ nn E i~ hn $hat f!ze Laao n
Page 5 and 6: A short version of this essay, enti
Page 8: Acknowledgments Many thanks for the
Page 11 and 12: NOT A ZERO-SUM GAME Table of Conten
Page 14 and 15: Foreword by Donald Boudreaux THE PA
Page 16 and 17: Foreword by Roger Miller THE PARADO
Page 18: THE PARADOX OF EXCHANGE Law and Eco
Page 21 and 22: NOT A ZERO-SUM GAME specialization.
Page 23 and 24: NOT A ZERO-SUM GAME Sir William Bla
Page 25 and 26: NOT A ZERO-SUM GAME It is not clear
Page 27 and 28: NOT A ZERO-SUM GAME the game is ove
Page 29 and 30: NOT A ZERO-SUM GAME increase produc
Page 31 and 32: NOT A ZERO-SUM GAME why it behooves
Page 33 and 34: NOT A ZERO-SUM GAME We will measure
Page 35 and 36: NOT A ZERO-SUM GAME Obviously, when
Page 37 and 38: NOT A ZERO-SUM GAME managerial abil
Page 39 and 40: NOT A ZERO-SUM GAME It is true that
Page 41 and 42: k %&> Trade as a Distributor of Wea
Page 43 and 44: NOT A ZERO-SUM GAME up getting stuc
Page 45 and 46: NOT A ZERO-SUM GAME Only competitor
Page 48 and 49: Epilogue Property Rights Matter In
Page 50 and 51: Foreign Exchange Comments on Trade
Page 52 and 53: different in each place. Although t
Page 56 and 57: PART 11 COMMENTS ON TRADE BETWEEN "
Page 58 and 59: Now suppose that the government of
Page 60 and 61: This is only possible politically b
Page 62: PART 11 COMMENTS ON TRADE BETWEEN "
Page 65 and 66: NOT A ZERO-SUM GAME tially the case
Page 67 and 68: NOT A ZERO-SUM GAME While far from
Page 69 and 70: NOT A ZERO-SUM GAME injurious U.S.
Page 71 and 72: NOT A ZERO-SUM GAME Free trade mean
Page 73 and 74: NOT A ZERO-SUM GAME pally steel and
Page 75 and 76: NOT A ZERO-SUM GAME As the delinque
Page 78: Selected Bibliography Basti-at, Frk
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