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International Trade with Endogenous Mode of Competition in General Equilibrium

J. Peter Neary and Joe Tharakan

CREPP Working Papers from Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège

Abstract: This paper endogenizes the extent of intra-sectoral competition in a multi-sectoral general-equilibrium model of oligopoly and trade. Firms choose capacity followed by prices. If the benefits of capacity investment in a given sector are below a threshold level, the sector exhibits Bertrand behaviour, otherwise it exhibits Cournot behaviour. By endogenizing the threshold parameter in general equilibrium, we show how exogenous shocks such as globalization and technological change alter the mix of sectors between “more” and “less” competitive, or Bertrand and Cournot, and affect the relative wages of skilled and unskilled workers, even in a “North-North” model with identical countries.

Date: 2011
New Economics Papers: this item is included in nep-int
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http://www2.ulg.ac.be/crepp/papers/crepp-wp201111.pdf (application/pdf)

Related works:
Journal Article: International trade with endogenous mode of competition in general equilibrium (2012) Downloads
Working Paper: International trade with endogenous mode of competition in general equilibrium (2012) Downloads
Working Paper: International trade with endogenous mode of competition in general equilibrium (2011) Downloads
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