IDEAS home Printed from https://ideas.repec.org/p/ucn/wpaper/200219.html
   My bibliography  Save this paper

Competitive versus comparative advantage

Author

Listed:
  • J. Peter Neary

Abstract

I explore the interactions between comparative, competitive and absolute advantage in a two-country model of oligopoly in general equilibrium. Comparative advantage always determines the direction of trade, but both competitive and absolute advantage affect resource allocation, trade patterns and trade volumes. Competitive advantage in the sense of more home firms drives foreign firms out of marginal sectors but also makes some marginal home sectors uncompetitive. Absolute advantage in the sense of a uniform fall in home costs tends to raise home output in all sectors but also leads both countries to specialise less in accordance with comparative advantage.

Suggested Citation

  • J. Peter Neary, 2002. "Competitive versus comparative advantage," Working Papers 200219, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200219
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10197/1325
    File Function: First version, 2002
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. J. Peter Neary, 2016. "International Trade in General Oligopolistic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 669-698, September.
    2. J.Peter Neary, 2002. "Foreign Competition and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 680-693, November.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    5. repec:bla:reviec:v:10:y:2002:i:4:p:680-93 is not listed on IDEAS
    6. Peter G. Warr, 1994. "Comparative and Competitive Advantage," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 8(2), pages 1-14, November.
    7. J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
    8. J. Peter Neary, 2000. "Monopolistic Competition and International Trade Theory," Working Papers 200025, School of Economics, University College Dublin.
    9. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    10. Weinstein, David E., 1992. "Competition and unilateral dumping," Journal of International Economics, Elsevier, vol. 32(3-4), pages 379-388, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. J. Peter Neary, 2016. "International Trade in General Oligopolistic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 669-698, September.
    2. Neary, Peter, 2009. "Two and a Half Theories of Trade," CEPR Discussion Papers 7600, C.E.P.R. Discussion Papers.
    3. J. Peter Neary, 2002. "Globalisation and market structure," Working Papers 200220, School of Economics, University College Dublin.
    4. 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.
    5. J. Peter Neary, 2010. "Two and a Half Theories of Trade†," The World Economy, Wiley Blackwell, vol. 33(1), pages 1-19, January.
    6. Ruffin, Roy J., 2003. "Oligopoly and trade: what, how much, and for whom?," Journal of International Economics, Elsevier, vol. 60(2), pages 315-335, August.
    7. Toraubally, Waseem A., 2023. "Comparative advantage with many goods: New treatment and results," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1188-1201.
    8. Paulo Bastos & Odd Rune Straume, 2012. "Globalization, product differentiation, and wage inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 857-878, August.
    9. Henk Kox & Arjan Lejour, 2005. "Regulatory heterogeneity as obstacle for international services trade," CPB Discussion Paper 49, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Egger, Hartmut & Etzel, Daniel, 2012. "The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium," European Economic Review, Elsevier, vol. 56(6), pages 1119-1135.
    11. Wrona, Jens & Kreickemeier, Udo, 2016. "Industrialisation and the Big Push in a Global Economy," VfS Annual Conference 2016 (Augsburg): Demographic Change 145707, Verein für Socialpolitik / German Economic Association.
    12. Paolo Epifani, 2003. "Trade liberalization, Firm Performances and Labor Market Outcomes in the Developing World, what Can We Learn From Micro-Level Data?," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 455-486.
    13. Giordano Mion & Gianmarco I.P. Ottaviano & Kristian Behrens, 2008. "Industry reallocations in a globalizing economy," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2008(4), pages 51-63.
    14. J.Peter Neary, 2002. "Foreign Competition and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 680-693, November.
    15. Garcia Pires, Armando José, 2006. "R&D and Strategic Industrial Location in International Oligopolies," CEPR Discussion Papers 5582, C.E.P.R. Discussion Papers.
    16. Fabien Candau, 2008. "Entrepreneurs' Location Choice And Public Policies: A Survey Of The New Economic Geography," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 909-952, December.
    17. G.A. Minerva, 2006. "Natural Advantage, Location and Trade Patterns in Increasing Returns to Scale Industries," Working Papers 560, Dipartimento Scienze Economiche, Universita' di Bologna.
    18. Joe Tharakan & Jacques-François Thisse, 2011. "Market Integration: Trade versus Economic Geography," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume II, chapter 6, Edward Elgar Publishing.
    19. Vittoria Idrisova, 2011. "Application of non-tariff barriers," Research Paper Series, Gaidar Institute for Economic Policy, issue 150P.
    20. Toru Kikuchi, 2010. "The Dixit-Stiglitz-Krugman Trade Model: A Geometric Note," Discussion Papers 1006, Graduate School of Economics, Kobe University.

    More about this item

    Keywords

    Comparative and absolute advantage; Comparative and competitive advantage; Exchange-rate protection; GOLE (General Oligopolistic Equilibrium); Market integration; Comparative advantage (International trade); International trade; Oligopolies; Competition;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucn:wpaper:200219. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nicolas Clifton (email available below). General contact details of provider: https://edirc.repec.org/data/educdie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.