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Trade Liberalization, Divison of Labor and Welfare under Oligopoly

Author

Listed:
  • Kenji Fujiwara

    (School of Economics, Kwansei Gakuin University)

  • Keita Kamei

    (Faculty of Literature and Social Sciences,Yamagata University)

Abstract

Incorporating explicitly division of labor into a two-country general oligopolistic equilibrium model, we examine the effects of trade liberalization on firm productivity and welfare. We show that a tariff reduction increases the firm productivity of the trading industries but decreases that of the non-trading industries. An expansion of the trading industries, in contrast, decreases the firm productivity of both the trading and non-trading industries. We then find that a tariff reduction necessarily reduces welfare while the welfare effect of expansion of trading industries is ambiguous.

Suggested Citation

  • Kenji Fujiwara & Keita Kamei, 2016. "Trade Liberalization, Divison of Labor and Welfare under Oligopoly," Discussion Paper Series 151, School of Economics, Kwansei Gakuin University, revised Nov 2016.
    • Handle: RePEc:kgu:wpaper:151
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    References listed on IDEAS

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    Cited by:

    1. Binglin Gong & Haiwen Zhou, 2023. "The choice of technology and international trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 32(7), pages 1035-1057, October.
    2. Quint, Ansgar F. & Rudsinske, Jonas F., 2020. "Asymmetric general oligopolistic equilibrium," University of Göttingen Working Papers in Economics 405, University of Goettingen, Department of Economics.
    3. Rudsinske, Jonas F., 2020. "How protectionism harms workers under oligopoly," University of Göttingen Working Papers in Economics 407, University of Goettingen, Department of Economics.
    4. Kenji Fujiwara, 2018. "Trade, Productivity and Welfare when Monopolistic Competition and Oligopoly Coexist," Discussion Paper Series 170, School of Economics, Kwansei Gakuin University, revised Jan 2018.
    5. Ya‐Po Yang & Ying‐Yi Tsai & Su‐Ying Hsu, 2021. "Technology licensing, entry mode, and trade liberalization," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 834-853, May.

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    More about this item

    Keywords

    General oligopolistic equilibrium; division of labor; firm productivity; welfare;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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