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Trade and Imperfect Competition in General Equilibrium

  • Onur A. Koska
  • Frank Stähler

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.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-08/cesifo1_wp3543.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3543.

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Date of creation: 2011
Handle: RePEc:ces:ceswps:_3543
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