Oligopolistic Competition, Firm Heterogeneity, and the Impact of International Trade

Haiwen Zhou

Eastern Economic Journal, 2010, vol. 36, issue 1, 107-119

Abstract: This paper studies the impact of international trade in a general equilibrium model in which heterogeneous firms engage in oligopolistic competition. An increase of the size of the market leads to a decrease of the equilibrium price and an increase of per capita consumption. The opening of international trade leads to an increased degree of competition, a lower price level, and the exit of least efficient firms. Although average profit increases, not all the surviving firms benefit from the opening of international trade.

Date: 2010
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