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A Graphical Examination of an Importer/Exporter Oligopoly Trade Model
Author(s) -
Fulton Murray,
Karantininis Kostas
Publication year - 1994
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1994.tb00004.x
Subject(s) - negotiation , economics , position (finance) , international trade , international economics , oligopoly , distribution (mathematics) , multilateral trade negotiations , point (geometry) , bargaining power , trade barrier , microeconomics , market economy , welfare , political science , mathematical analysis , mathematics , finance , law , geometry
Market power considerations in international trade have income distribution effects among countries that can influence the position a country takes with respect to trade negotiations. Since models that examine a single country mask these distributional effects, it is important to consider more than one country in trade models. While the contribution of this paper is largely to the pedagogical foundation of agricultural economics in showing how models with two countries can be analyzed graphically — thereby opening this part of the literature up to a wider audience — the analysis also reinforces a point that is missed in models focusing on a single country. By showing under what conditions a country may prefer to use domestic policies even when this causes other countries to retaliate, the paper high‐lights one of the factors likely to be important in determining the success of international trading arrangements such as GATT.