860 B
860 B
Colonial Trade Pattern Distortion
Definition
The artificial alteration of natural trade flows caused by monopoly restrictions, forcing goods through inefficient routes, creating round-about trade patterns, and preventing direct exchange between colonies and their most advantageous markets. These distortions reduce overall economic efficiency.
Source Chapter
Book IV, Chapter 7
Context
Smith uses trade pattern distortion as a key example of how monopoly policies create economic inefficiencies. He demonstrates that the forced re-routing of colonial products through British ports increases costs and reduces the value that could be created through more direct trade relationships.
Economic Domain
Exchange