Oligopoly in International Trade: Rise, Fall and Resurgence

Keith Head and Barbara Spencer

No 23720, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Large firms played a central role in the “new trade” models that became a major focus of trade economists in the early 1980s. Subsequent literature for the most part kept imperfect competition but jettisoned oligopoly. Instead, as the heterogeneous firms literature burgeoned in the 2000s, monopolistic competition quickly became established as the workhorse model. The use of oligopoly in trade models has been criticized for reasons that we argue are unpersuasive. Renewed incorporation of oligopolistic firms in international trade is warranted. Quantitative investigations of welfare effects of trade policy should again address the impact of such policies on the allocation of profits across countries.

JEL-codes: F12 F13 F14 L13 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-int
Note: ITI
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Citations: View citations in EconPapers (59)

Published as Keith Head & Barbara J. Spencer, 2017. "Oligopoly in international trade: Rise, fall and resurgence," Canadian Journal of Economics/Revue canadienne d'économique, vol 50(5), pages 1414-1444.

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Journal Article: Oligopoly in international trade: Rise, fall and resurgence (2017)
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