International trade with endogenous mode of competition in general equilibrium
(2012) Journal of International Economics — Vol. 86, n° 1, p. 118-132 (2012)
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- Authors
- Abstract
- This paper endogenizes the extent of intra-sectoral competition in a multi-sectoral general-equilibrium model of oligopoly and trade. Firms choose capacity followed by prices. If the benefits of capacity investment in a given sector are below a threshold level, the sector exhibits Bertrand behavior, otherwise it exhibits Cournot behavior. By endogenizing the threshold parameter in general equilibrium, we show how exogenous shocks such as globalization and technological change alter the mix of sectors between “more” and “less” competitive, or Bertrand and Cournot, and affect the relative wages of skilled and unskilled workers, even in a “North–North” model with identical countries.
- Affiliations
University of Oxford Department of Economics Université de Liège Department of Economics
Citations
Neary, J. P., & Tharakan, J. (2012). International trade with endogenous mode of competition in general equilibrium. Journal of International Economics, 86(1), 118-132. https://doi.org/10.1016/j.jinteco.2011.08.004 (Original work published 2012)