Competition for firms in an oligopolistic industry: The impact of economic integration

Andreas Haufler and Ian Wooton ()

Journal of International Economics, 2010, vol. 80, issue 2, 239-248

Abstract: We set up a model of generalised oligopoly where two countries of different size compete for an exogenous, but variable, number of identical firms. The model combines a desire by national governments to attract internationally mobile firms with the existence of location rents that arise even in a symmetric equilibrium where firms are dispersed. As economic integration proceeds, equilibrium taxes initially decline, but then rise again as trade costs fall even further. A range of trade costs is identified where economic integration raises the welfare of the small country, but lowers welfare in the large country.

Keywords: Tax/subsidy; competition; Oligopolistic; markets; Economic; integration (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (103)

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Working Paper: Competition for firms in an oligopolistic industry: The impact of economic integration (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:80:y:2010:i:2:p:239-248

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