ABSTRACT
WE revert, then, to the assumption of increasing costs; and we continue to assume that there is no deficit or surplus on the balance of trade. But we now modify the assumption that there is free trade in both countries. There are eight "simple55 forms of commercial policy to be considered:—
Import duty in A Import subsidy in A Export duty in B Export subsidy in B Import duty in B Import subsidy in B Export duty in A Export subsidy in A
There are in addition a very large number of "complex" forms of commercial policy interventions, such as import duties in both A and B combined, perhaps, with export subsidies in one or both countries.
