Shapley Value and International Trade ()
ABSTRACT
International trade is modeled as a
multinational cooperative game where Shapley value leads
to fair distribution of total trade gains. This fair-trade solution entails side payments among trading nations, essentially
international trade adjustment assistance. These Shapley side payments
provide balance to the often
contentious free-trade solution, which is essentially open-door and hands-off.
We develop requisite calculations and illustrate them with a hypothetical
four-nation trade game. We conclude that Shapley fair-trade estimates
and calculations should be an integral part of any international trade
negotiation.
Share and Cite:
Agnew, R. (2023) Shapley Value and International Trade.
Theoretical Economics Letters,
13, 391-396. doi:
10.4236/tel.2023.133026.