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Trade and Imperfect Competition in General Equilibrium

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  • Onur A. Koska
  • Frank Stähler

Abstract

This paper employs a general equilibrium model of imperfect competition and trade in which capital is used to establish firms and labor is used for production. We show that two different types of equilibria may exist, one with factor price equalization and one with different factor prices. When factor prices are equalized, trade improves welfare under relatively mild conditions. However, if factor prices differ, these conditions are not sufficient for mutual gains from trade.

Suggested Citation

  • Onur A. Koska & Frank Stähler, 2011. "Trade and Imperfect Competition in General Equilibrium," CESifo Working Paper Series 3543, CESifo.
    • Handle: RePEc:ces:ceswps:_3543
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    Cited by:

    1. Koska, Onur A. & Stähler, Frank, 2015. "Factor price differences in a general equilibrium model of trade and imperfect competition," Research in Economics, Elsevier, vol. 69(2), pages 248-259.
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    3. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    4. Colacicco, Rudy, 2012. "Strategic Trade Policy in General Oligopolistic Equilibrium," MPRA Paper 38118, University Library of Munich, Germany.
    5. Ciliberto, Federico & Jäkel, Ina C., 2021. "Superstar exporters: An empirical investigation of strategic interactions in Danish export markets," Journal of International Economics, Elsevier, vol. 129(C).

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    More about this item

    Keywords

    imperfect competition; international trade; general equilibrium;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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