Free Trade vs. Autarky under Asymmetric Cournot Oligopoly
The paper compares free trade with autarky in an asymmetric multi-country world with Cournot competition, constant returns and linear demand. We first derive conditions for free trade to hurt a country’s consumers, to benefit its firms, to induce it to export, to increase its output, and to raise its welfare. We further show these conditions are linked in a clear order, with each one implying the next. We then demonstrate that with different reservation prices trade can reduce world output and total consumer surplus as well as world welfare and correct oversights in earlier findings by Dong and Yuan (2010).
|Date of creation:||01 Oct 2015|
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- Baomin Dong & Lasheng Yuan, 2010. "The Loss from Trade under International Cournot Oligopoly with Cost Asymmetry," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 818-831, November. Full references (including those not matched with items on IDEAS)
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