Trade Policy, Cumulative Causation, and Industrial Development.
This paper considers the effects of trade policy in industries which are imperfectly competitive, and in which there is an input-output structure, creating vertical linkages between firms. Two models are presented, one based on Cournot oligopoly and the other on Dixit-Stiglitz product differentiation. In both models it may be the case that trade liberalization triggers a dramatic expansion of output and possibly also a reduction in imports. This arises as import liberalization lowers costs in...Expand abstract
- Journal of Development Economics
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