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Monopolistic competition and international trade theory

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  • J. Peter Neary

Abstract

Almost twenty-five years after the appearance of Dixit and Stiglitz’s paper on monopolistic competition and optimum product diversity, I try to take stock of the progres which has been made in applying their approach to international trade theory. I review the principal applications to trade theory and present a new one: by embedding DS preferences in a specific-factors framework, I sketch a model which shows how multinational corporations can emerge even between countries with similar factor endowments. Finally, I address some limitations of the approach, including its treatment of variety, returns to scale, entry and firms’ strategies.

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  • J. Peter Neary, 2000. "Monopolistic competition and international trade theory," Working Papers 200025, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:200025
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    File URL: http://hdl.handle.net/10197/1254
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    Cited by:

    1. J. Peter Neary, 2003. "Competitive versus Comparative Advantage," The World Economy, Wiley Blackwell, vol. 26(4), pages 457-470, April.
    2. Behrens, Kristian & Murata, Yasusada, 2012. "Trade, competition, and efficiency," Journal of International Economics, Elsevier, vol. 87(1), pages 1-17.
    3. J. Peter Neary, 2009. "Putting the “New” into New Trade Theory: Paul Krugman's Nobel Memorial Prize in Economics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 217-250, June.
    4. Kristian Behrens & Yasusada Murata, 2011. "Trade, Competition, and Efficiency (revised version)," Cahiers de recherche 1118, CIRPEE.
    5. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    6. Kichun Kang & Byung Chul Ahn, 2010. "China's Penetration of the Korean Market: Stylized Facts and Welfare Effect," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(5), pages 54-71, September.
    7. d’Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2020. "Exploiting separability in a multisectoral model of oligopolistic competition," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 51-59.
    8. J. Peter Neary, 2002. "Globalisation and market structure," Working Papers 200220, School of Economics, University College Dublin.
    9. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2006. "Cross-Border Mergers & Acquisitions: The Facts as a Guide for International Economics," CESifo Working Paper Series 1823, CESifo.
    10. Carsten Eckel, 2009. "International Trade and Retailing," CESifo Working Paper Series 2597, CESifo.
    11. Toru Kikuchi, 2010. "The Dixit-Stiglitz-Krugman Trade Model: A Geometric Note," Discussion Papers 1006, Graduate School of Economics, Kobe University.
    12. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2005. "Cross-Border Mergers and Acquisitions: On Revealed Comparative Advantage and Merger Waves," CESifo Working Paper Series 1602, CESifo.
    13. Henk Kox & Arjan Lejour, 2005. "Regulatory heterogeneity as obstacle for international services trade," CPB Discussion Paper 49, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Tibor Besedes & Thomas J. Prusa, 2004. "Surviving the U.S. Import Market: The Role of Product Differentiation," NBER Working Papers 10319, National Bureau of Economic Research, Inc.
    15. Van-Ilya, Andrei, 2012. "Spatial Allocation of Economy as a Fiber Bundle," MPRA Paper 40820, University Library of Munich, Germany.
    16. KANG, Kichun, 2008. "How much have been the export products changed from homogeneous to differentiated? Evidence from China, Japan, and Korea," China Economic Review, Elsevier, vol. 19(2), pages 128-137, June.
    17. BEHRENS, Kristian & MURATA, Yasusada, 2006. "Gains from trade and efficiency under monopolistic competition: a variable elasticity case," LIDAM Discussion Papers CORE 2006049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Kokovin, Sergey & Thisse, Jacques-François & Zhelobodko, Evgeny, 2010. "Monopolistic Competition: Beyond the CES," CEPR Discussion Papers 7947, C.E.P.R. Discussion Papers.
    19. Li, ShiNa & Blake, Adam & Thomas, Rhodri, 2013. "Modelling the economic impact of sports events: The case of the Beijing Olympics," Economic Modelling, Elsevier, vol. 30(C), pages 235-244.

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    More about this item

    Keywords

    Dixit-Stiglitz model; International trade with increasing returns and product differentiation; Monopolistic competition; Multinational corporations; International trade; Monopolistic competition; International business enterprises;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F10 - International Economics - - Trade - - - General

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