The Welfare Effects of Trade Policies - Partial Equilibrium

A partial equilibrium analysis distinguishes between the welfare of consumers who purchase a product and the producers who produce it. Consumer welfare is measured using consumer surplus, while producer welfare is measured using producer surplus. Revenue collected by the government is assumed to be redistributed to others. Government revenue is either spent on public goods or is redistributed to someone in the economy, thus raising the welfare of somebody.

International Trade Theory and Policy - Chapter 90-6: Last Updated on 4/16/97