Oligopoly and international trade

Arghya Ghosh

Chapter 29 in Elgar Encyclopedia of International Trade, 2026, pp 148-152 from Edward Elgar Publishing

Abstract: Traditional models of trade, based on comparative advantage under perfect competition, explain inter-industry trade but fail to account for the prevalence of intra-industry trade among similar countries. The introduction of oligopoly models in the late 1970s, aided by game theory, highlighted how strategic interactions among a few large firms can generate welfare-improving trade and alter optimal trade policy. Classic contributions demonstrated how export subsidies or taxes may shift profits across borders depending on whether firms compete in quantities or prices. Subsequent advances integrated oligopoly into general equilibrium settings, allowing richer analysis of markups, misallocation, and pro-competitive gains from trade. Recent work combines oligopoly with heterogeneity and comparative advantage, offering insights into firm-level trade patterns and modern industrial policies. The entry argues for renewed attention to oligopoly, especially given rising market concentration globally.

Keywords: Bertrand; Cournot; Oligopoly (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327492
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