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International trade with endogenous mode of competition in general equilibrium

J. Peter Neary and Joe Tharakan

Journal of International Economics, 2012, vol. 86, issue 1, 118-132

Abstract: This paper endogenizes the extent of intra-sectoral competition in a multi-sectoral general-equilibrium model of oligopoly and trade. Firms choose capacity followed by prices. If the benefits of capacity investment in a given sector are below a threshold level, the sector exhibits Bertrand behavior, otherwise it exhibits Cournot behavior. By endogenizing the threshold parameter in general equilibrium, we show how exogenous shocks such as globalization and technological change alter the mix of sectors between “more” and “less” competitive, or Bertrand and Cournot, and affect the relative wages of skilled and unskilled workers, even in a “North–North” model with identical countries.

Keywords: Bertrand and Cournot competition; GOLE (General Oligopolistic Equilibrium); Kreps–Scheinkman; Market integration; Trade; Technology and wages (search for similar items in EconPapers)
JEL-codes: F10 F12 L13 (search for similar items in EconPapers)
Date: 2012
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Working Paper: International trade with endogenous mode of competition in general equilibrium (2012) Downloads
Working Paper: International trade with endogenous mode of competition in general equilibrium (2011) Downloads
Working Paper: International Trade with Endogenous Mode of Competition in General Equilibrium (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:86:y:2012:i:1:p:118-132

DOI: 10.1016/j.jinteco.2011.08.004

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