Industrial Organization and International Trade
74 Pages Posted: 28 May 2004
Date Written: June 1986
This paper reviews recent work on the relationship between industrialorganization and international trade. Five strands in the theoreticalliterature are discussed. First is the role of economies of scaleas a cause of intra-industry trade, modelled using monopolistic competition.Second is the effect of tariffs and quotas on domestic marketpower. Third is the analysis of dumping as international price discrimination.Fourth is the potential strategy role of government policy as anaid to domestic firms in oligopolistic competition. Finally, the paperdiscusses recent work that may provide a new argument for protectionism.A concluding section discusses recent efforts at quantification of newtrade theory.
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