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Two and a Half Theories of Trade †

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  • J. Peter Neary

Abstract

Abstract This paper discusses the place of oligopoly in international trade theory, and argues that it is unsatisfactory to ignore firms altogether, as in perfectly competitive models, or to view large firms as more productive clones of small ones, as in monopolistically competitive models. Doing either fails to account for the granularity in the size distribution of firms and for the dominance of large firms in exporting. The paper outlines three ways of developing more convincing models of oligopoly, which allow for free entry but do not lose sight of the grains in granularity: heterogeneous industries, natural oligopoly, and superstar firms. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal World Economy.

Volume (Year): 33 (2010)
Issue (Month): 1 (01)
Pages: 1-19

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Handle: RePEc:bla:worlde:v:33:y:2010:i:1:p:1-19

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Why might you want oligopolistic models of trade?
    by jdingel in Trade diversion on 2010-05-27 01:11:17
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Cited by:
  1. Onur A. Koska & Frank Stähler, 2011. "Trade and Imperfect Competition in General Equilibrium," CESifo Working Paper Series 3543, CESifo Group Munich.

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