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Foreign Economic Aid and Trade Liberalization Under Imperfect Competition

In: International Trade and Economic Dynamics


  • Hiroshi Kurata

    (Tohoku Gakuin University)

  • Masayuki Okawa

    (Ritsumeikan University)


This chapter examines the possibility of a mutually beneficial policy combination of economic aid by a donor country and tariff reducing trade liberalization in the recipient country under imperfect competition. We set up a simple two country Ricardian trading model in which the donor's export good is supplied by a monopoly firm and the recipient country imposes tariff on imports from the donor country. We derive the condition that mutually beneficial policy coordination can be agreed by the two countries.

Suggested Citation

  • Hiroshi Kurata & Masayuki Okawa, 2009. "Foreign Economic Aid and Trade Liberalization Under Imperfect Competition," Springer Books, in: Takashi Kamihigashi & Laixun Zhao (ed.), International Trade and Economic Dynamics, pages 139-149, Springer.
  • Handle: RePEc:spr:sprchp:978-3-540-78676-4_13
    DOI: 10.1007/978-3-540-78676-4_13

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