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Empirical Research on Trade Liberalization With Imperfect Competition: A Survey

  • J. David Richardson
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    This paper attempts a synthetic census of the calibration/counterfactual style of empirical research on the benefits of trade liberalization with imperfect competition and scale economies. Computable-general-equilibrium studies are surveyed, as are a large number of partial-equilibrium studies in the same style. Microeconomic foundations common to almost all of the studies are discussed algebraically, and the corresponding general-equilibrium structure is discussed graphically. The first typical conclusion from the studies surveyed is that calculated gains in national purchasing power are usually two to three times the size of those estimated in traditional frameworks with perfect competition. Only occasionally are welfare losses calculated from trade liberalization, although such losses are quite possible in theory, as a large recent literature has shown. The second typical conclusion is that calculated adjustment pressures from trade liberalization are considerably higher than implied in most commentary, and higher also than estimates from traditional models. Adjustment pressures describe stimuli for workers to shift activities, for firms to grow or die, for industries to expand or contract, and for trading-partner shares to be altered.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2883.

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    Date of creation: Mar 1989
    Date of revision:
    Publication status: published as Empirical Research on Trade Liberalisation with Imperfect Competition: A Survey." From OECD Economic Studies, No. 1/2, pp. 7-50, (Spring 1989).
    Handle: RePEc:nbr:nberwo:2883
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    1. Grossman, Gene M & Helpman, Elhanan, 1989. "Product Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1261-83, December.
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    20. repec:fth:wilfau:89128 is not listed on IDEAS
    21. Baldwin, Richard, 1990. "Hysteresis in Trade," Empirical Economics, Springer, vol. 15(2), pages 127-42.
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    25. Richard Harris, 1983. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," Working Papers 524, Queen's University, Department of Economics.
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    27. Caves, Richard E., 1985. "International trade and industrial organization: Problems, solved and unsolved," European Economic Review, Elsevier, vol. 28(3), pages 377-395, August.
    28. Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365 Elsevier.
    29. James E. Anderson, 1988. "The Relative Inefficiency of Quotas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511789, June.
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    36. Harrison, Glenn W. & Jones, Richard & Kimbell, Larry J. & Wigle, Randal, 1993. "How robust is applied general equilibrium analysis?," Journal of Policy Modeling, Elsevier, vol. 15(1), pages 99-115, February.
    37. Brown, Drusilla K., 1987. "Tariffs, the terms of trade, and national product differentiation," Journal of Policy Modeling, Elsevier, vol. 9(3), pages 503-526.
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