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Oligopoly in international trade: Rise, fall and resurgence
Author(s) -
Head Keith,
Spencer Barbara J.
Publication year - 2017
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12303
Subject(s) - monopolistic competition , oligopoly , imperfect competition , economics , competition (biology) , welfare , imperfect , international economics , international trade , commercial policy , microeconomics , market economy , monopoly , ecology , linguistics , philosophy , biology
Abstract Large firms played a central role in the “new trade” models that became a major focus of trade economists in the early 1980s. Subsequent literature for the most part kept imperfect competition but jettisoned oligopoly. Instead, as the heterogeneous firms literature burgeoned in the 2000s, monopolistic competition quickly became established as the workhorse model. The use of oligopoly in trade models has been criticized for reasons that we argue are unpersuasive. Renewed incorporation of oligopolistic firms in international trade is warranted. Quantitative investigations of welfare effects of trade policy should again address the impact of such policies on the allocation of profits across countries.