A note on the effects of market power distribution in Cordella and Gabszewicz's Ricardian model

Emanuele Bacchiega

Research in Economics, 2013, vol. 67, issue 2, 111-116

Abstract: We argue that it is the distribution of market power among agents, rather than the use of market power itself, that may force Ricardian economies into autarky. By applying Baldwin (1948) monopoly equilibrium concepts to the general equilibrium with imperfect competition model analyzed by Cordella and Gabszewicz (1997), we show that the monopoly equilibrium outcome Pareto dominates the oligopoly one. As a consequence, economic efficiency is higher when market power is concentrated in one agent than when it is evenly distributed among few agents.

Keywords: Comparative advantage; Market power distribution; Monopoly; Oligopoly; General equilibrium (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:67:y:2013:i:2:p:111-116

DOI: 10.1016/j.rie.2013.02.001

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