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Trade Liberalization, Division of Labor and Welfare under Oligopoly

Author

Listed:
  • Kenji Fujiwara

    (Kwansei Gakuin University)

  • Keita Kamei

    (Yamagata University)

Abstract

Incorporating explicitly division of labor into a two-country gen- eral oligopolistic equilibrium model, we examine the firm productivity effect of trade liberalization and its welfare implication. We show that a tariff reduction increases the firm productivity of the trading indus- tries 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, Division of Labor and Welfare under Oligopoly," KIER Working Papers 949, Kyoto University, Institute of Economic Research.
  • Handle: RePEc:kyo:wpaper:949
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    References listed on IDEAS

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    Cited by:

    1. Quint, Ansgar F. & Rudsinske, Jonas F., 2020. "Asymmetric general oligopolistic equilibrium," Center for European, Governance and Economic Development Research Discussion Papers 405, University of Goettingen, Department of Economics.
    2. Rudsinske, Jonas F., 2020. "How protectionism harms workers under oligopoly," Center for European, Governance and Economic Development Research Discussion Papers 407, University of Goettingen, Department of Economics.
    3. 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.

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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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