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Competitive General Equilibrium with Finite Change and Theory of Policy Making

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  • Hamid Beladi
  • Avik Chakrabarti
  • Sugata Marjit

Abstract

We construct a generalized model of finite change whereby exogenous shocks such as international trade or technological change, not only contract, but totally shut down production in some sectors. In such cases even in a competitive structure and in absolute contrast to the conventional wisdom, price based strategies to protect those vanishing sectors will not be equivalent to quantity based strategies. We also consider factor trade and a similar asymmetry between price based and quantity based interventionist policies.

Suggested Citation

  • Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2014. "Competitive General Equilibrium with Finite Change and Theory of Policy Making," Discussion Papers 2014-11, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:14/12
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    References listed on IDEAS

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    Keywords

    Finite change; Trade policy; General Equilibrium.;

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