Abstract
Assuming a separable utility function of two traded goods and leisure, R. A. Brecher's minimum-wage economy is generalized. An elastic, but not perfectly elastic, foreign offer curve is assumed. The effects of changes in factor endowments, foreign trade, the wage rate, a consumption tax, and tariff on social welfare and the demand for labor are considered. In particular, the optimal consumption tax and optimal tariff formulae are derived. The ranking of various trade policies is shown to depend on the assumption concerning factor intensity. Copyright 1992 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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