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Equilibrium existence and uniqueness in additive trade models

Author

Listed:
  • Fedor Slepov

    (National Research University Higher School of Economics)

  • Sergey Kokovin

    (National Research University Higher School of Economics)

Abstract

This paper develops a modeling technique of “attainable profit” functions, applying it to two models of monopolistic competition. First, it revisits the Krugman’s classical trade model in the most general form: several asymmetric countries and non-specified additive utility functions. We establish the weakest conditions on utilities, sufficient for the existence of equilibria. These conditions are also necessary under symmetric preferences. Equilibrium uniqueness is proved only for the case of two countries. Second, we study another, “indirectly additive” trade model (Bertoletti and Etro, 2015), and establish weak conditions on non-specified indirect utilities for the existence of equilibria in several asymmetric countries.

Suggested Citation

  • Fedor Slepov & Sergey Kokovin, 2023. "Equilibrium existence and uniqueness in additive trade models," HSE Working papers WP BRP 262/EC/2023, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:262/ec/2023
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    More about this item

    Keywords

    international trade; monopolistic competition; variable elasticity of substitution; variable markups; existence of equilibria; attainable profits;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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