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Oligopoly in International Trade: Rise, Fall and Resurgence

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  • Keith Head
  • Barbara J. Spencer

Abstract

Large firms played a central role in the “new trade” models that became a major focus of trade economists in the early 1980s. Subsequent literature for the most part kept imperfect competition but jettisoned oligopoly. Instead, as the heterogeneous firms literature burgeoned in the 2000s, monopolistic competition quickly became established as the workhorse model. The use of oligopoly in trade models has been criticized for reasons that we argue are unpersuasive. Renewed incorporation of oligopolistic firms in international trade is warranted. Quantitative investigations of welfare effects of trade policy should again address the impact of such policies on the allocation of profits across countries.

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  • Keith Head & Barbara J. Spencer, 2017. "Oligopoly in International Trade: Rise, Fall and Resurgence," NBER Working Papers 23720, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23720
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    Cited by:

    1. Andrea Ariu & Florian Mayneris & Mathieu Parenti, 2018. "One way to the top : How services boost the demand for goods," Working Paper Research 340, National Bank of Belgium.
    2. Giammario Impullitti & Omar Licandro & Pontus Rendahl, 2017. "Technology, Market Structure and the Gains from Trade," CESifo Working Paper Series 6727, CESifo Group Munich.
    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.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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