The Concise Encyclopedia of Economics


Jagdish Bhagwati

The fact that trade protection hurts the economy of the country that imposes it is one of the oldest but still most startling insights economics has to offer. The idea dates back to the origin of economic science itself. Adam Smith's The Wealth of Nations, which gave birth to economics, already contained the argument for free trade: by specializing in production instead of producing everything, each nation would profit from free trade. In international economics, it is the direct counterpart to the proposition that people within a national economy will all be better off if they specialize at what they do best instead of trying to be self-sufficient....


International Trade Agreements

Douglas A. Irwin

Ever since Adam Smith published The Wealth of Nations in 1776, the vast majority of economists have accepted the proposition that free trade among nations improves overall economic welfare. Free trade, usually defined as the absence of tariffs, quotas, or other governmental impediments to international trade, allows each country to specialize in the goods it can produce cheaply and efficiently relative to other countries. Such specialization enables all countries to achieve higher real incomes....


Corporate Taxation

Rob Norton

Pollution Controls

Robert W. Crandall

Health Insurance

John C. Goodman

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Harry Gordon Johnson


Harry Johnson, a Canadian, was one of the most active and prolific economists of all time. His main research was in the area of international trade, international finance, and monetary policy.

One of Johnson's early articles on international trade showed that a country with monopoly power in some good could impose a tariff and be better off, even if other countries retaliated against the tariff. His proof was what is sometimes called a "possibility theorem"; it showed that such a tariff could improve the country's well-being, not that it was likely to. Johnson, realizing the difference between what could be and what is likely to be, was a strong believer in free trade. Indeed, he often gave lectures in his native Canada excoriating the Canadian government for its protectionist policies and arguing that Canada could eliminate some of the gap between Canadian and U.S. standards of living by implementing free trade....