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Linkage Effects, Oligopolistic Competition, and Core-periphery

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  • Haiwen Zhou

    (Department of Economics, Old Dominion University, Norfolk, VA 23529, USA)

Abstract

The impact of international trade is studied in a general equilibrium model in which firms engage in oligopolistic competition and linkage effects are present. Results are derived analytically. If countries have the same technologies and the same labor endowment, core-periphery pattern arises only if the transportation costs are sufficiently low. The impact of a change of the level of the transportation costs on the welfare of developed countries is sensitive to the level of linkage effects. When the level of linkage effects is sufficiently high, a decrease of the level of the transportation costs will never decrease the welfare of developed countries.

Suggested Citation

  • Haiwen Zhou, 2013. "Linkage Effects, Oligopolistic Competition, and Core-periphery," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(1), pages 93-110.
  • Handle: RePEc:pal:easeco:v:39:y:2013:i:1:p:93-110
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    References listed on IDEAS

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    1. Davis, Donald R, 1998. "The Home Market, Trade, and Industrial Structure," American Economic Review, American Economic Association, vol. 88(5), pages 1264-1276, December.
    2. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    3. J. Peter Neary, 2007. "Cross-Border Mergers as Instruments of Comparative Advantage," Review of Economic Studies, Oxford University Press, vol. 74(4), pages 1229-1257.
    4. Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, Southern Economic Association, vol. 74(2), pages 581-600, October.
    5. 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.
    6. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
    7. Ming Chen & Yeung-Nan Shieh, 2011. "Specific commodity taxes, output and location decision under free entry oligopoly," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(1), pages 25-36, August.
    8. Haiwen Zhou, 2010. "Globalisation and the Size Distribution of Firms," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 84-94, March.
    9. repec:hhs:iuiwop:430 is not listed on IDEAS
    10. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
    11. Haiwen Zhou, 2007. "Oligopolistic Competition And Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 915-933.
    12. Charles I. Jones, 2011. "Intermediate Goods and Weak Links in the Theory of Economic Development," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 1-28, April.
    13. Jeffrey G. Williamson, 2006. "Globalization and the Poor Periphery before 1950," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232502, January.
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F10 - International Economics - - Trade - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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