Trade Liberalization, Competition and Growth

Omar Licandro () and Antonio Navas-Ruiz

No 6500, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The aim of this paper is to understand whether international trade may enhance innovation and growth through an increase in competition. We develop a two-country endogenous growth model, both countries producing the same set of goods, with firm specific R&D and a continuum of oligopolistic sectors under Cournot competition. Since countries produce the same set of goods, trade openness makes markets more competitive, reducing prices and raising the incentives to innovate. More general, a reduction on trade barriers enhances growth by reducing domestic firms market power.

Keywords: Competition and growth; R&d; Trade openness (search for similar items in EconPapers)
JEL-codes: F13 F43 O3 (search for similar items in EconPapers)
Date: 2007-09
New Economics Papers: this item is included in nep-com, nep-cse, nep-int and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Trade Liberalization, Competition and Growth (2015)
Journal Article: Trade Liberalization, Competition and Growth (2011)
Working Paper: Trade Liberalization, Competition and Growth (2010)
Working Paper: Trade Liberalization, Competition and Growth (2008)
Working Paper: Trade liberalization, competition and growth (2007)
Working Paper: TRADE LIBERALIZATION, COMPETITION AND GROWTH (2007)
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