Trade and Imperfect Competition in General Equilibrium

41 Pages Posted: 24 Aug 2011

See all articles by Onur A. Koska

Onur A. Koska

University of Tuebingen - Department of Economics

Frank Stähler

University of Tuebingen - Department of Economics; University of Adelaide - School of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: August 24, 2011

Abstract

This paper employs a general equilibrium model of imperfect competition and trade in which capital is used to establish firms and labor is used for production. We show that two different types of equilibria may exist, one with factor price equalization and one with different factor prices. When factor prices are equalized, trade improves welfare under relatively mild conditions. However, if factor prices differ, these conditions are not sufficient for mutual gains from trade.

Keywords: imperfect competition, international trade, general equilibrium

JEL Classification: F120, D500

Suggested Citation

Koska, Onur A. and Stähler, Frank, Trade and Imperfect Competition in General Equilibrium (August 24, 2011). Available at SSRN: https://ssrn.com/abstract=1915947 or http://dx.doi.org/10.2139/ssrn.1915947

Onur A. Koska

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

Frank Stähler (Contact Author)

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

HOME PAGE: http://www.frank-staehler.de

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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