The paper shows that between two competitive but risky economies with no insurance markets, free trade may be Pareto inferior to no trade. The model is simple enough to show clearly the role prices play in transferring and sharing risk when there is an incomplete set of markets, but rich enough to exhibit the resulting inefficiencies dramatically.
No takes yet. Share an insight, caveat, or question.
Newbery et al. (1984) studied this question.
Synapse has enriched 2 closely related papers on similar clinical questions. Consider them for comparative context: