Comparative Advantage Under Monopoly: A Note on the Role of Market Power

5 Pages Posted: 5 Jan 2011

See all articles by Emanuele Bacchiega

Emanuele Bacchiega

University of Bologna - Department of Economics

Date Written: January 4, 2011

Abstract

We argue that it is the number of agents holding market power, rather than the presence of market power itself, that may force Ricardian economies into autarchy. We apply the concepts of monopoly equilibrium by Baldwin (1948) to the model of Cordella and Gabszewicz (1997) to show that, differently from the oligopoly case, trade always arises at a monopoly equilibrium whereas autarchy is never an outcome. As a consequence, monopoly Pareto-dominates oligopoly.

Suggested Citation

Bacchiega, Emanuele, Comparative Advantage Under Monopoly: A Note on the Role of Market Power (January 4, 2011). Available at SSRN: https://ssrn.com/abstract=1734843 or http://dx.doi.org/10.2139/ssrn.1734843

Emanuele Bacchiega (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
40126 Bologna, 40125
Italy
+390512098486 (Phone)
+390512098493 (Fax)

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