International trade in general oligopolistic equilibrium

Working paper

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 inCournot competition. I show how competitive advantage interacts with comparative advantage to determine resource allocation, and, specializing to continuum-quadraticpreferences, 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 ina two-country world.

Authors: Neary, P

• Publication status: Published
• Publisher: University of Oxford
• Series: Department of Economics Discussion Paper Series
• Publication date: 2015-12-02
• Paper number: 769
• Keywords: "continuum-Pollak" preferences; trade and income distribution; GOLE (general oligopolistic equilibrium); continuum-quadratic preferences; market integration