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Competitive versus Comparative Advantage

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Author Info
J Peter Neary (University College Dublin)

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Abstract

I explore the interactions between comparative, competitive and absolute advantage in a two-country model of oligopoly in general equilibrium. Comparative advantage always determines the direction of trade, but both competitive and absolute advantage affect resource allocation, trade patterns and trade volumes. Competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive. Absolute advantage in the sense of a uniform fall in home costs tends to raise home output in all sectors but also leads both countries to specialise less in accordance with comparative advantage.

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File URL: http://www.ucd.ie/economics/research/papers/2002/WP02.19.pdf
File Format: application/pdf
File Function: First version, 2002
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Publisher Info
Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200219.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 25 pages
Date of creation: 18 Aug 2002
Date of revision:
Handle: RePEc:ucn:wpaper:200219

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Postal: UCD, Belfield, Dublin 4
Phone: +353-1-7067777
Fax: +353-1-283 0068
Web page: http://www.ucd.ie/economics
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Related research
Keywords: Comparative and absolute advantage; comparative and competitive advantage; exchange-rate protection; GOLE (General Oligopolistic Equilibrium); market integration;

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. J. Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June. [Downloadable!] (restricted)
    Other versions:
  2. Neary, J Peter, 2002. "Foreign Competition and Wage Inequality," Review of International Economics, Blackwell Publishing, vol. 10(4), pages 680-93, November. [Downloadable!] (restricted)
    Other versions:
  3. J. Peter Neary, 2000. "Monopolistic Competition and International Trade Theory," Working Papers 200025, School Of Economics, University College Dublin. [Downloadable!]
  4. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-39, December. [Downloadable!] (restricted)
    Other versions:
  5. Weinstein, David E., 1992. "Competition and unilateral dumping," Journal of International Economics, Elsevier, vol. 32(3-4), pages 379-388, May. [Downloadable!] (restricted)
  6. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February. [Downloadable!] (restricted)
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  7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Klinger, Bailey & Lederman, Daniel, 2004. "Discovery and development : an empricial exploration of"new"products," Policy Research Working Paper Series 3450, The World Bank. [Downloadable!]
  2. G.A. Minerva, 2006. "Natural Advantage, Location and Trade Patterns in Increasing Returns to Scale Industries," Working Papers 560, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  3. Bertrand Crettez & Marie-Cécile Fagart, 2008. "Does entry improve welfare? A general equilibrium approach to competition policy," EconomiX Working Papers 2008-14, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
  4. Ari Van Assche & Chang Hong & Veerle Slootmaekers, 2008. "China’s International Competitiveness: Reassessing the Evidence," LICOS Discussion Papers 20508, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  5. J. Peter Neary, 2006. "Measuring Competitiveness," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 197-213. [Downloadable!]
    Other versions:
  6. Kikuchi, Toru & Shimomua, Koji, 2008. "Comparative Advantage and Trade Liberalization in a Chamberlinian-Ricardian Model," MPRA Paper 8199, University Library of Munich, Germany. [Downloadable!]
  7. Roberto Basile & Luca De Benedictis, 2004. "Regional Unemployment and Productivity in Europe and the US," ERSA conference papers ersa04p38, European Regional Science Association. [Downloadable!]
  8. J Peter Neary, 2002. "Globalisation and Market Structure," Working Papers 200220, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  9. Toru Kikuchi, 2008. "Economic Integration in a Chamberlinian-Ricardian World," EERI Research Paper Series EERI_RP_2008_07, Economics and Econometrics Research Institute (EERI). [Downloadable!]
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