Trade liberalization,division of labor and welfare under oligopoly |
| |
Authors: | Kenji Fujiwara |
| |
Institution: | School of Economics, Kwansei Gakuin University, Nishinomiya, Hyogo, Japan |
| |
Abstract: | Incorporating explicitly division of labor into a two-country general oligopolistic equilibrium model, we examine the effects of trade liberalization on firm productivity and welfare. We show that a tariff reduction increases the firm productivity of the trading industries but decreases that of the non-trading industries. An expansion of the trading industries, in contrast, decreases the firm productivity of both the trading and non-trading industries. We then find that a tariff reduction necessarily reduces welfare while the welfare effect of expansion of trading industries is ambiguous. |
| |
Keywords: | General oligopolistic equilibrium division of labor firm productivity welfare |
|
|