Losses From Trade In Krugman’s Model: Almost Impossible

Igor Bykadorov, Alexey Gorn, Sergey Kokovin and Evgeny Zhelobodko

HSE Working papers from National Research University Higher School of Economics

Abstract: Studying the standard monopolistic competition model with unspecified utility/cost functions, we find necessary and sufficient conditions on the function elasticities, when an expanding market or trade incur welfare losses. Two numerical examples explain why: either excessive or insufficient entry of firms is aggravated by market growth. The variable marginal cost enforces the harmful effect. Still harm looks practically improbable.

Keywords: Market distortions; Trade gains; Variable markups; Demand elasticity. (search for similar items in EconPapers)
JEL-codes: F12 L13 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2014
New Economics Papers: this item is included in nep-bec, nep-int and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in WP BRP Series: Economics / EC, July 2014, pages 1-12

Downloads: (external link)
http://www.hse.ru/data/2014/07/17/1312376619/61EC2014.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:61/ec/2014

Access Statistics for this paper

More papers in HSE Working papers from National Research University Higher School of Economics
Bibliographic data for series maintained by Shamil Abdulaev () and Shamil Abdulaev ().