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Abstract:
One of the most widely accepted principles of economics is the existence of gains
from trade for every nation under certain conditions including perfect competition. In the last
twenty years, trade economists have revolutionized the field by firmly establishing the possibility
of modeling imperfectly competitive international markets. Despite this development, most still
agree there are good reasons to believe that gains from trade are still present. However, we
show that in the absence of international redistributions the presence of a positive profit sector
in a general equilibrium model can lead to a situation in which some nations may lose from the
reduction of international trade barriers.
Full paper (570 KB PDF)
Keywords
gains from trade, imperfectly competitive international markets, international price Nash duopoly, spatial price competition
PDF files: Adobe Acrobat Reader ZIP files: PKWARE
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Last update: August 21, 2002
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