The Economics of the World Trading System
分析贸易自由化中的贸易条件外部性，指出多边自由化因外部性抵消而集体理性，但单边自由化可能因贸易条件损失而缺乏个体理性，形成囚徒困境。
Economists are still divided on the importance of the terms‐of‐trade externality in the trade liberalisation process. The classical case for trade liberalisation, first made by Adam Smith, is of course unilateral. Trade liberalisation entails the efficiency enhancing removal of domestic distortions. But on the other hand additional supply of exports to the world market, or equivalently increased demand for imports from the world market, may depress a country’s terms of trade and reduce its purchasing power. This is the terms‐of‐trade externality at work. If one country liberalises unilaterally, it loses terms‐of‐trade to a country that does not liberalise. In keeping with Adam Smith’s basic argument, multilateral trade liberalisation is collectively rational because the terms of trade externalities tend to cancel out, leaving only the efficiency gains which are enjoyed by all countries. However, unilateral trade liberalisation is not individually rational if the terms of trade loss dominates. This problem is often referred to as the ‘terms‐of‐trade driven Prisoners’ Dilemma’.