A Monopoly Reason Why Autarky Might Be Best for a Large Country

12 Pages Posted: 23 May 2005

See all articles by Yochanan Shachmurove

Yochanan Shachmurove

City University of New York, CUNY City College of New York - Department of Economics; The University of Pennsylvania - Department of Economics

Uriel Spiegel

Bar-Ilan University - Department of Management

Abstract

Will all countries gain from free trade? Two countries, one with a large and the other a small population, are modeled. Once trade is opened, real income rises in the small country and falls in the large one. The intuition is that, without trade, the large country's local monopoly makes profits at the expense of its consumers. With trade, the foreign duopolist earns some of the profits, even though the industry profits are smaller. Average home consumption falls, even though all the home citizens, except the producer, benefit. This can explain the objections to the lifting of economic barriers.

Suggested Citation

Shachmurove, Yochanan and Spiegel, Uriel, A Monopoly Reason Why Autarky Might Be Best for a Large Country. Manchester School, Vol. 73, No. 3, pp. 269-280, June 2005. Available at SSRN: https://ssrn.com/abstract=727297

Yochanan Shachmurove (Contact Author)

City University of New York, CUNY City College of New York - Department of Economics ( email )

160 Convent Avenue
New York, NY 10031
United States
212-650-6202 (Phone)

The University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-1090 (Phone)
215-573-2057 (Fax)

Uriel Spiegel

Bar-Ilan University - Department of Management ( email )

Ramat-Gan, 52900
Israel
011-972-3-5318282 (Phone)
+972.3.535.3329 (Fax)

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