Under what circumstances would two countries have no incentive to trade?

Answer 1

For the same reasons you wouldn't buy from a shop near home. 3 Reasons stop us from doing business with someone:

1/ Money - their product is more expensive than things you can get other places

2/ Saftey - Poorer quality could harm my kids, etc

3/ Lack of Trust - I have seen an item I wanted, it was within my price range, but the salesman was so much of a sleezebag, I walked out without it

Same internationally. Costs; workmanship or Quality; "Made by Osama Bin Laden Inc" is not a selling point

Answer 2

Transportation costs would have to outweigh gains from specialization. If that's not clear enough, update the question.

Edit: based on others. Price is unlikely to be a factor unless transportation etc costs make it so. Trade benefits countries because of relative costs of goods within those countries. If good A is 40 dollars in country X and 50 dollars in country Y, while good B is 1 dollar in country X and 2 dollars in country Y, there are gains from trade - even though everything is more expensive in country Y. In this case, they will export good A from Y to X, because it is relatively cheaper - in country 1, good A is worth 40 X good B, whereas in country 2, its only worth 25 times as much. That meants if say 30 of good B from country X were exchanged from 1 of good A from country Y, both countries would benefit.

If you look at the case of 'shrimp and taiwan', we might expect shrimp to be relatively cheap there, so there _should_ be incentive to trade, we can import their cheap shrimp in exchange for some other good or service - even if that good is slighly more expensive here, its worth trading for their very cheap shrimp.

Answer 3

If neither country had anything the other needed or wanted.

Answer 4

if they have no product the other country wants.


no need to send shrimp to taiwan, they have plenty. and i mean PLENTY.

Answer 5

war, nothing produced of any interest, poor quality, etc.