IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/95.html
   My bibliography  Save this paper

International trade and imperfect competition : theory and application to the automobile trade

Author

Listed:
  • Goto, Junichi

Abstract

This paper develops a formal general equilibrium trade model for imperfect competition, a model easily applied to actual situations. The model shows that in the long run, international trade brings about five gains: (1) consumers can enjoy a wider selection of goods through the introduction of foreign goods; (2) monopolistic power of domestic producers is weakened by foreign competition; (3) the unit cost of production is reduced by foreign competition and by further use of increasing returns to scale technology; (4) contrary to popular belief, foreign competition reduces unemployment in the long run by rectifying labor market imperfections; and (5) international division of labor encourages savings in fixed costs, and the saved capital resources can facilitate economic growth. The model is also applied to the U.S. auto trade in 1986 to estimate the magnitude of the five effects. The model is general enough for the analysis of many industries in both developed and developing countries.

Suggested Citation

  • Goto, Junichi, 1988. "International trade and imperfect competition : theory and application to the automobile trade," Policy Research Working Paper Series 95, The World Bank.
    • Handle: RePEc:wbk:wbrwps:95
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1988/09/01/000009265_3960927054703/Rendered/PDF/multi0page.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:95. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.