Free trade vs. autarky under asymmetric Cournot oligopoly
MetadataShow full item record
Altmetrics Handle Statistics
The paper compares free trade with autarky in an asymmetric multi-country world with Cournot competition, constant returns and linear demand. We first derive conditions for free trade to hurt a country’s consumers, to benefit its firms, to induce it to export, to increase its output, and to raise its welfare. We further show these conditions are linked in a clear order, with each one implying the next. We then demonstrate that with different reservation prices trade can reduce world output and total consumer surplus as well as world welfare and correct oversights in earlier findings by Dong and Yuan (2010).
Amir , R , Jin , J Y & Tröge , M 2015 ' Free trade vs. autarky under asymmetric Cournot oligopoly ' School of Economics & Finance Discussion Paper , no. 1509 , University of St Andrews , St Andrews , pp. 1-20 .
Working or discussion paper
Copyright (c)2015 the authors