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A note on the effects of market power distribution in Cordella and Gabszewicz's Ricardian model

Listed author(s):
  • Bacchiega, Emanuele

We argue that it is the distribution of market power among agents, rather than the use of market power itself, that may force Ricardian economies into autarky. By applying Baldwin (1948) monopoly equilibrium concepts to the general equilibrium with imperfect competition model analyzed by Cordella and Gabszewicz (1997), we show that the monopoly equilibrium outcome Pareto dominates the oligopoly one. As a consequence, economic efficiency is higher when market power is concentrated in one agent than when it is evenly distributed among few agents.

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File URL: http://www.sciencedirect.com/science/article/pii/S1090944313000033
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Article provided by Elsevier in its journal Research in Economics.

Volume (Year): 67 (2013)
Issue (Month): 2 ()
Pages: 111-116

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Handle: RePEc:eee:reecon:v:67:y:2013:i:2:p:111-116
DOI: 10.1016/j.rie.2013.02.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622941

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  1. Rabah Amir & Val E. Lambson, 2000. "On the Effects of Entry in Cournot Markets," Review of Economic Studies, Oxford University Press, vol. 67(2), pages 235-254.
  2. Cordella, Tito & J. Gabszewicz, Jean, 1997. "Comparative advantage under oligopoly," Journal of International Economics, Elsevier, vol. 43(3-4), pages 333-346, November.
  3. Bottazzi, Jean-Marc & De Meyer, Bernard, 2003. "A market game for assets and taxed investors," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 657-675, July.
  4. Jones, Ronald W. & Peter Neary, J., 1984. "The positive theory of international trade," Handbook of International Economics,in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 1, pages 1-62 Elsevier.
  5. Rieber, William J, 1982. "Discriminating Monopoly and International Trade," Economic Journal, Royal Economic Society, vol. 92(366), pages 365-376, June.
  6. Richard Sweeney, 1974. "Monopoly, the law of comparative advantage, and commodity price agreements: A simple general equilibrium analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 110(2), pages 259-287, June.
  7. R. Melvin, James & Warne, Robert D., 1973. "Monopoly and the theory of international trade," Journal of International Economics, Elsevier, vol. 3(2), pages 117-134, May.
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