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International Trade in General Oligopolistic Equilibrium
Author(s) -
Neary J. Peter
Publication year - 2016
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/roie.12233
Subject(s) - economics , oligopoly , cournot competition , general equilibrium theory , normative , microeconomics , competition (biology) , comparative advantage , international trade , ecology , philosophy , epistemology , biology
This paper presents a new model of oligopoly in general equilibrium and explores its implications for positive and normative aspects of international trade. Assuming “continuum–Pollak” preferences, the model allows for consistent aggregation over a continuum of sectors, in each of which a small number of home and foreign firms engage in Cournot competition. I show how competitive advantage interacts with comparative advantage to determine resource allocation and, specializing to continuum–quadratic preferences, I explore the model's implications for the gains from trade, for the distribution of income between wages and profits, and for production and trade patterns in a two‐country world.