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Trade and FDI liberalization in a general oligopolistic equilibrium

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  • Fujiwara, Kenji

Abstract

Incorporating recent evidence that FDI firms are more efficient than exporters into a general oligopolistic equilibrium model, this paper examines the welfare effects of trade and FDI liberalization. We find that trade liberalization alone is beneficial if the difference in marginal cost between the exporting and FDI industries is small enough while FDI liberalization unambiguously improves welfare. Combining these results, we further show that simultaneous liberalization of trade and FDI necessarily turns out welfare-improving.

Suggested Citation

  • Fujiwara, Kenji, 2017. "Trade and FDI liberalization in a general oligopolistic equilibrium," Japan and the World Economy, Elsevier, vol. 41(C), pages 45-49.
  • Handle: RePEc:eee:japwor:v:41:y:2017:i:c:p:45-49 DOI: 10.1016/j.japwor.2016.12.003
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    More about this item

    Keywords

    Trade liberalization; FDI liberalization; General oligopolistic equilibrium; Welfare;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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