Trade liberalization, division of labor and welfare under oligopoly

Kenji Fujiwara () and Keita Kamei

The Journal of International Trade & Economic Development, 2018, vol. 27, issue 1, 91-101

Abstract: Incorporating explicitly division of labor into a two-country general oligopolistic equilibrium model, we examine the effects of trade liberalization on firm productivity and welfare. We show that a tariff reduction increases the firm productivity of the trading industries but decreases that of the non-trading industries. An expansion of the trading industries, in contrast, decreases the firm productivity of both the trading and non-trading industries. We then find that a tariff reduction necessarily reduces welfare while the welfare effect of expansion of trading industries is ambiguous.

Date: 2018
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Related works:
Working Paper: Trade Liberalization, Divison of Labor and Welfare under Oligopoly (2016)
Working Paper: Trade Liberalization, Division of Labor and Welfare under Oligopoly (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:27:y:2018:i:1:p:91-101

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DOI: 10.1080/09638199.2017.1339362

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