The theory of trade has a central place in economic analysis, and underpins the doctrine of free trade. Free trade doctrines have a long and fascinating history in Europe. International trade in the twenty-first century does not correspond to the textbook model, in which finished goods are produced in one country to be transported by air, sea or land for sale in another country. It is clear that the terms of trade are of considerable importance for determining how the gains from trade are distributed. The terms of trade were roughly half way between the pre-trade price ratios of both countries. This ensured that both countries enjoyed some gain from trade. However, it is self-evident that the closer are the terms of trade to the pre-trade price ratio of a country, the smaller the gain from trade for that country and the bigger the gain for the other country. The uniqueness of this book hence lies in the author's way of reconstructing the chapter under review by delving deep into the areas of the subject.
