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A Non-Neoclassical General Equilibrium Trade Model Implemented for Quebec

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  • Hazledine, Tim

Abstract

A general equilibrium model is developed of the consequences for a trading economy ofichangas in the tariffs imposed on flows of goods between it and its trading partners. Expressions are given for the adjustments in exchange rates and wage rates needed to restore internal and external balance following changes in the tariff structure. It is suggested that the neoclassical 'law-of-one-price' does not hold in the international markets for manufactured goods. In its place is put a model of market behaviour when goods are generally heterogeneous. This model is consistent with the phenomenon of .'intra-industry trade', as well as with other empirical findings about the pricing and output behaviour of firms. The model is implemented with data on the Quebec economy in 1974. Various changes in Quebec's trading relations with the rest of Canada and with other countries, such as those which might follow should Quebec become an independent country, are examined.

Suggested Citation

  • Hazledine, Tim, 1980. "A Non-Neoclassical General Equilibrium Trade Model Implemented for Quebec," Queen's Institute for Economic Research Discussion Papers 275159, Queen's University - Department of Economics.
    • Handle: RePEc:ags:queddp:275159
    DOI: 10.22004/ag.econ.275159
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    References listed on IDEAS

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