Import Competition and Market Power: Canadian Evidence
Part of Introduction: A number of international trade models have now been developed that account for imperfect competition. Although some of these models provide insight into situations where trade protection may be welfare improving, most indicate that imperfect competition provides additional sources of gains from trade. Many of these gains result from the “pro-competitive” effect of trade: import competition increases the perceived elasticity of demand for domestic firms, leading them to reduce their mark-ups of price over marginal cost.
|Date of creation:||Dec 1999|
|Date of revision:||Mar 2000|
|Publication status:||Published: Carleton Economic Paper|
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