A Unified Explanation of Trade Liberalization Effects Across Models of Imperfect Competition

Martin Alfaro and David Lander ()
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David Lander: Peking University

No 2019-16, Working Papers from University of Alberta, Department of Economics

Abstract: This paper reconciles for the first time the wide range of outcomes arising in studies of trade liberalizations. We define an imperfect-competition model encompassing the major variants of monopolistic competition (Krugman, Melitz, and Chaney) and Cournot (with free and restricted entry). This model reveals that seemingly disparate outcomes are not due to market structure, as usually conjectured, but differences in marginal entrants' features. Thus, once we reconcile these differences, the same outcomes emerge across all models. By identifying assumptions on marginal entrants that generate pro-competitive, anti-competitive, or null effects, we also explain why puzzling outcomes arise in some standard frameworks.

Keywords: imperfect competition; unilateral liberalization; import competition; export opportunities (search for similar items in EconPapers)
JEL-codes: D43 F10 F12 L13 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2019-10-30
New Economics Papers: this item is included in nep-com and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2019_016

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