Why are losses from trade unlikely?
Igor Bykadorov (),
Alexey Gorn (),
Sergey Kokovin and
Economics Letters, 2015, vol. 129, issue C, 35-38
Examining a standard monopolistic competition model with unspecified utility/cost functions, we find necessary and sufficient conditions on their elasticities for welfare losses to arise from trade or market expansion. Two numerical examples explain the losses (under unrealistic elasticities).
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)
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