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Trade, Productivity and Welfare when Monopolistic Competition and Oligopoly Coexist

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  • Kenji Fujiwara

    (School of Economics, Kwansei Gakuin University)

Abstract

We develop a two-country general equilibrium model where monopolistically competitive and oligopolistic industries coexist, and intrafirm division of labor involves economies of scale. If market size increases, the productivity of all industries and welfare improve. However, as the proportion of trading sectors rises, the productivity of trading industries increases, but that of non-trading industries decreases. Although the welfare effect of expansion of trading sectors is analytically unclear, a numerical simulation tells that it is positive.

Suggested Citation

  • 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.
    • Handle: RePEc:kgu:wpaper:170
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    References listed on IDEAS

    as
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