IDEAS home Printed from https://ideas.repec.org/p/kyo/wpaper/949.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP949.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. J. Peter Neary, 2016. "International Trade in General Oligopolistic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 669-698, September.
    3. Chaney, Thomas & Ossa, Ralph, 2013. "Market size, division of labor, and firm productivity," Journal of International Economics, Elsevier, vol. 90(1), pages 177-180.
    4. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 1-54, Elsevier.
    5. Thomas Chaney & Ralph Ossa, 2013. "Market Size, Division of Labor, and Firm Productivity," Post-Print hal-03579667, HAL.
    6. repec:hal:spmain:info:hdl:2441/312fvs95ub8ct80ng4em8fjifb is not listed on IDEAS
    7. Paulo Bastos & Odd Rune Straume, 2012. "Globalization, product differentiation, and wage inequality," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 857-878, August.
    8. Joachim Wagner, 2016. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 2, pages 43-87, World Scientific Publishing Co. Pte. Ltd..
    9. Dasgupta, Partha & Stiglitz, Joseph E, 1988. "Learning-by-Doing, Market Structure and Industrial and Trade Policies," Oxford Economic Papers, Oxford University Press, vol. 40(2), pages 246-268, June.
    10. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    11. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    12. Robert C. Feenstra, 2015. "Advanced International Trade: Theory and Evidence Second Edition," Economics Books, Princeton University Press, edition 2, number 10615.
    13. Naomitsu Yashiro & Daisuke Hirano, 2009. "Do All Exporters Benefit from Export Boom? -Evidence from Japan," KIER Working Papers 689, Kyoto University, Institute of Economic Research.
    14. De Loecker, Jan, 2007. "Do exports generate higher productivity? Evidence from Slovenia," Journal of International Economics, Elsevier, vol. 73(1), pages 69-98, September.
    15. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    16. Kamei, Keita, 2014. "Pro-competitive effect, division of labor, and firm productivity," Economics Letters, Elsevier, vol. 124(1), pages 132-135.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. 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.
    3. 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.
    4. Ansgar F. Quint & Jonas F. Rudsinske, 2024. "Asymmetric general oligopolistic equilibrium," The World Economy, Wiley Blackwell, vol. 47(3), pages 1167-1190, March.
    5. Rudsinske, Jonas F., 2020. "How protectionism harms workers under oligopoly," University of Göttingen Working Papers in Economics 407, University of Goettingen, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Fujiwara, Kenji, 2017. "Trade and FDI liberalization in a general oligopolistic equilibrium," Japan and the World Economy, Elsevier, vol. 41(C), pages 45-49.
    3. Kamei, Keita, 2013. "Trade Liberalization, Division of Labor, and Firm Productivity," MPRA Paper 50301, University Library of Munich, Germany.
    4. Maria Bas & Vanessa Strauss-Kahn, 2014. "Does importing more inputs raise exports? Firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 241-275, May.
    5. Shintaku, Koji, 2015. "Decision on the number of export markets firms enter and the optimal division of labor within firms," MPRA Paper 62138, University Library of Munich, Germany.
    6. Koji Shintaku, 2014. "The Division of Labor within Firms, Optimal Entry, and Firm Productivity," Discussion papers e-14-012, Graduate School of Economics Project Center, Kyoto University.
    7. Nocco, Antonella & Ottaviano, Gianmarco I.P. & Salto, Matteo, 2019. "Geography, competition, and optimal multilateral trade policy," Journal of International Economics, Elsevier, vol. 120(C), pages 145-161.
    8. Wrona, Jens & Kreickemeier, Udo, 2016. "Industrialisation and the Big Push in a Global Economy," VfS Annual Conference 2016 (Augsburg): Demographic Change 145707, Verein für Socialpolitik / German Economic Association.
    9. Federico J. Diez & Jesse Mora & Alan C. Spearot, 2016. "Firms in international trade," Working Papers 16-25, Federal Reserve Bank of Boston.
    10. Michael Blanga-Gubbay & Paola Conconi & Mathieu Parenti, 2020. "Globalization for Sale," CESifo Working Paper Series 8239, CESifo.
    11. Parenti, Mathieu, 2018. "Large and small firms in a global market: David vs. Goliath," Journal of International Economics, Elsevier, vol. 110(C), pages 103-118.
    12. Wolszczak-Derlacz Joanna, 2018. "The Analysis of Firms’ Involvement in Internationalisation And Determinants of its Intensity – An Analysis For Developing and Post-Transition Economies," Economics and Business Review, Sciendo, vol. 4(1), pages 44-63, April.
    13. Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Zhu, Susan Chun, 2017. "Global engagement and the occupational structure of firms," European Economic Review, Elsevier, vol. 100(C), pages 273-292.
    14. Hein Roelfsema & Yi Zhang, 2018. "Internationalization and Innovation in Emerging Markets," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 12(3), pages 34-42.
    15. Tomasz Brodzicki & Dorota Ciolek, 2016. "Creativity pays off. Innovation, innovation strategy, and internationalization," Working Papers 1601, Instytut Rozwoju, Institute for Development.
    16. Kenji Fujiwara, 2016. "Trade and FDI liberalization in a general oligopolistic equilibrium," Discussion Paper Series 150, School of Economics, Kwansei Gakuin University, revised Nov 2016.
    17. Carlo Reggiani & Yevgeniya Shevtsova, 2018. "Trade and Productivity in a Transition Economy: the Role of Industry and Export Destination," Journal of Industry, Competition and Trade, Springer, vol. 18(3), pages 395-428, September.
    18. Brander, James A. & Spencer, Barbara J., 2015. "Intra-industry trade with Bertrand and Cournot oligopoly: The role of endogenous horizontal product differentiation," Research in Economics, Elsevier, vol. 69(2), pages 157-165.
    19. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    20. Toraubally, Waseem A., 2023. "Comparative advantage with many goods: New treatment and results," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1188-1201.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kyo:wpaper:949. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Makoto Watanabe (email available below). General contact details of provider: https://edirc.repec.org/data/iekyojp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.