Free trade versus autarky under asymmetric Cournot oligopoly
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The paper compares free trade with autarky in an asymmetric multi-country world under Cournot competition with constant returns to scale and linear demand. We derive respective conditions under which free trade will hurt a country's consumers, benefit its firms, induce it to export, increase its output and raise its welfare. We show that these conditions are linked in a clear order, with one implying the next. We further demonstrate that free trade can reduce world total output and total consumer surplus as well as world welfare. Along the way, we correct several oversights in the literature.
Amir , R , Jin , J Y & Tröge , M 2017 , ' Free trade versus autarky under asymmetric Cournot oligopoly ' Review of International Economics , vol. 25 , no. 1 , pp. 98-107 . https://doi.org/10.1111/roie.12257
Review of International Economics
© 2016 John Wiley & Sons Ltd. This work has been made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at: https://doi.org/10.1111/roie.12257
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