Free Trade versus Autarky Under Asymmetric Cournot Oligopoly

10 Pages Posted: 4 Jan 2017

See all articles by Rabah Amir

Rabah Amir

University of Arizona - Department of Economics; University of Arizona

Jim Y. Jin

University of St. Andrews - School of Management

Michael Tröge

ESCP Europe

Date Written: February 2017

Abstract

The paper compares free trade with autarky in an asymmetric multi‐country world under Cournot competition with constant returns to scale and linear demand. We derive respective conditions under which free trade will hurt a country's consumers, benefit its firms, induce it to export, increase its output and raise its welfare. We show that these conditions are linked in a clear order, with one implying the next. We further demonstrate that free trade can reduce world total output and total consumer surplus as well as world welfare. Along the way, we correct several oversights in the literature.

Suggested Citation

Amir, Rabah and Jin, Jim Y. and Tröge, Michael, Free Trade versus Autarky Under Asymmetric Cournot Oligopoly (February 2017). Review of International Economics, Vol. 25, Issue 1, pp. 98-107, 2017. Available at SSRN: https://ssrn.com/abstract=2893388 or http://dx.doi.org/10.1111/roie.12257

Rabah Amir (Contact Author)

University of Arizona - Department of Economics ( email )

Tucson, AZ 85721
United States

University of Arizona ( email )

Department of History
Tucson, AZ 85721
United States

Jim Y. Jin

University of St. Andrews - School of Management ( email )

The Gateway
Gateway
St. Andrews, Fife KY16 9SS
United Kingdom

Michael Tröge

ESCP Europe ( email )

79, avenue de la République
Paris, 75011
France

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