Premium
Technical Improvements and Welfare under International Duopoly
Author(s) -
Okawa Masayuki
Publication year - 2009
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2008.00795.x
Subject(s) - duopoly , economics , commodity , welfare , technical progress , perfect competition , international economics , industrial organization , international trade , market economy , microeconomics , macroeconomics
It is now common wisdom that a free‐trading country with perfectly competitive markets might be hurt by its own technical improvement of that country's export industry, and that an improvement in the import‐competing industry never impoverishes the country if no commodity is inferior for that country. This paper examines the welfare effects of technical progress in a perfectly competitive industry and in an internationally duopolistic market in a two‐country, two‐good, one‐factor trading model. It will be shown that the above propositions are severely qualified in our setting with duopolistic industry.