International Trade in General Oligopolistic Equilibrium

By J. P. Neary. Social Science Research Network, 2016

161 citations recorded by the source corpus.

This paper presents a new model of oligopoly in general equilibrium and explores its implications for positive and normative aspects of international trade. Assuming “continuum-Pollak” preferences, the model allows for consistent aggregation over a continuum of sectors, in each of which a small number of home and foreign firms engage in Cournot competition. I show how competitive advantage interacts with comparative advantage to determine resource allocation, and, specializing to continuum-quadratic preferences, I explore the model’s implications for the gains from trade, for the distribution of income between wages and profits, and for production and trade patterns in a two-country world.

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