Trade and imperfect competition in general equilibrium

Onur Koska and Frank Stähler

Journal of International Economics, 2014, vol. 94, issue 1, 157-168

Abstract: This paper employs a multi-industry general equilibrium model of oligopolistic competition, free market entry and trade in which capital is used to establish firms and labor is used for production. We show that both absolute and relative endowments matter for the pattern of trade. We demonstrate that market entry to each industry is either too excessive or too moderate while the effect on firm size is ambiguous. If countries are sufficiently symmetric, trade will increase the wage–rental ratio in both countries. Furthermore, trade will increase per-capita consumption in capital-intensive industries and reduce it in labor-intensive industries. Nevertheless, trade will be mutually welfare-improving under relatively mild conditions.

Keywords: Oligopolistic competition; International trade; General equilibrium (search for similar items in EconPapers)
JEL-codes: D50 F12 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Trade and Imperfect Competition in General Equilibrium (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:94:y:2014:i:1:p:157-168

DOI: 10.1016/j.jinteco.2014.05.004

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