ABSTRACT
Consider a competitive world economy, free trading and with no non-tariff market distortions, but supporting an arbitrary feasible system of international lump-sum transfers. It has long been known (at least to some) that, in the simplest case in which just two countries trade in just two commodities, with each country exporting one commodity, the non-distorting transfers can be replaced by a pair of individually distorting but collectively equivalent import duties, one positive and the other negative; see Mayer (1981: 142).2
