Unilateral and Multilateral Gains from Trade in International Oligopoly*

Kenji Fujiwara

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Global trade and economics Merger and Competition Analysis Global Trade and Competitiveness

Abstract

Constructing a two-agent model of international duopoly with increasing returns, the present paper examines potential gains from free trade. It is shown that under certain conditions, both agents in a country become worse off in free trade than in autarky with no redistribution. Further, the lump-sum compensation can never achieve a Pareto-improvement in such an economy. However, we can find a non-lump-sum redistributive scheme that makes nobody in the country worse off in free trade than in autarky.

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1986Market Structure and Foreign Trade 1985Export subsidies and international market share rivalry 1985Market structure and foreign trade 1984Monopolistic competition and international trade 1984Pareto Inferior Trade 1995International Trade in Goods and Factor Mobility 1939The Gains from International Trade 1981Trade and the gains from trade with imperfect competition

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