On a misconception concerning the classical gains-from- trade proposition In R. Pethig and M. Rauscher, eds, Challenges to the World Economy: Festschrift for Horst Siebert, 277–9. 2003

Existing proofs of the classical doctrine that free trade is potentially beneficial to each trading nation are typically based on the Arrow-Debreu or McKenzie model of general equilibrium, extended to accommodate any finite number of trading countries, each with a country-specific scheme of lump-sum compensation installed; see, for example, Grandmont and McFadden (1972) and Kemp and Wan (1972, 1993). In those models, all markets clear at an initial point of time, with all exchanges, present and future, agreed upon at that moment. There is no room for decisions based on imperfect information.