GEP Research Paper 03/36
The Le Châtelier Principle in the Theory of International Trade
Udo Kreickemeier
Abstract
This paper shows in a general framework the broad applicability of the Le Châtelier Principle in international trade theory and policy. By stressing the formal similarity between a small open economy and a price taking multi-product firm, the paper clarifies the links between some earlier applications of the Le Châtelier Principle in the trade literature and derives some new results. In addition, it is shown how some of the Le Châtelier results, which in their established form are locally valid only, can be generalised to finite parameter changes.
Issued in September 2003.
This paper is available in PDF format.