IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v16y2023i8p357-d1205260.html
   My bibliography  Save this article

International Borrowing and Lending in the Presence of Oligopolistic Competition

Author

Listed:
  • Ronald Ravinesh Kumar

    (Department of Economics and Finance, The Business School, Saigon South Campus, RMIT University, Ho-Chi-Minh City 700000, Vietnam)

  • Peter J. Stauvermann

    (Department of Global Business and Economics, Changwon National University, Changwon 51-142, Republic of Korea)

Abstract

This paper examines the implications of imperfect competition in a two-country framework where a single good is produced. Using an overlapping generation model, we analyze the effects of market structures. Specifically, one country is assumed to operate under a perfectly competitive market structure, while the other country operates under an oligopolistic market structure. Our analysis reveals that the differences in factor prices between the two countries when they are in autarky lead to intergenerational trade once their capital markets are integrated. A key finding is that the country with an oligopolistic market structure becomes a lending country, while the country with a competitive market structure becomes a borrowing country. Furthermore, we find that the country with an oligopolistic market structure, serving as a lender, experiences a current account surplus, while the country with a perfectly competitive market structure, acting as a debtor, incurs a current account deficit.

Suggested Citation

  • Ronald Ravinesh Kumar & Peter J. Stauvermann, 2023. "International Borrowing and Lending in the Presence of Oligopolistic Competition," JRFM, MDPI, vol. 16(8), pages 1-26, July.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:8:p:357-:d:1205260
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/16/8/357/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/16/8/357/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. José Azar & Xavier Vives, 2021. "General Equilibrium Oligopoly and Ownership Structure," Econometrica, Econometric Society, vol. 89(3), pages 999-1048, May.
    2. Jean-Pierre Vidal & Philippe Michel & Bertrand Crettez, 1996. "Time preference and labour migration in an OLG model with land and capital," Journal of Population Economics, Springer;European Society for Population Economics, vol. 9(4), pages 387-403.
    3. Ronald Ravinesh Kumar & Peter J. Stauvermann, 2021. "Revisited: Monopoly and Long-Run Capital Accumulation in Two-Sector Overlapping Generation Model," JRFM, MDPI, vol. 14(7), pages 1-19, July.
    4. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    5. J. Peter Neary, 2007. "Cross-Border Mergers as Instruments of Comparative Advantage," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(4), pages 1229-1257.
    6. Jean-Pierre Vidal & Philippe Michel & Bertrand Crettez, 1998. "Time preference and capital mobility in an OLG model with land," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(1), pages 149-158.
    7. Galor, Oded, 1992. "The Choice of Factor Mobility in a Dynamic World," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(2), pages 135-144, April.
    8. Eggertsson, Gauti B. & Robbins, Jacob A. & Wold, Ella Getz, 2021. "Kaldor and Piketty’s facts: The rise of monopoly power in the United States," Journal of Monetary Economics, Elsevier, vol. 124(S), pages 19-38.
    9. Mr. Federico J Diez & Mr. Daniel Leigh & Suchanan Tambunlertchai, 2018. "Global Market Power and its Macroeconomic Implications," IMF Working Papers 2018/137, International Monetary Fund.
    10. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alessandro Ferrari & Francisco Queirós, 2021. "Firm Heterogeneity, Market Power and Macroeconomic Fragility," CSEF Working Papers 627, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Jean-Pierre Vidal, 1998. "The effect of emigration on human capital formation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(4), pages 589-600.
    3. Damien Gaumont & Alice Mesnard, 2001. "Inheritance, land, and capital mobility linked to labour mobility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(4), pages 669-687.
    4. Vidal, Jean-Pierre, 2000. "Capital Mobility in a Dynastic Framework," Oxford Economic Papers, Oxford University Press, vol. 52(3), pages 606-625, July.
    5. Vidal, J.-P., 1999. "Capital Mobility in a Dynastic Framework," G.R.E.Q.A.M. 99a21, Universite Aix-Marseille III.
    6. Emmanuel Thibault, 2001. "Labor immigration and long-run welfare in a growth model with heterogenous agents and endogenous labor supply," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(2), pages 391-407.
    7. Ferrando, Annalisa & McAdam, Peter & Petroulakis, Filippos & Vives, Xavier, 2021. "Product market structure and monetary policy: evidence from the Euro Area," Working Paper Series 2632, European Central Bank.
    8. Mondolo, Jasmine, 2021. "Macroeconomic dynamics and the role of market power. The case of Italy," MPRA Paper 110172, University Library of Munich, Germany, revised 05 Oct 2021.
    9. Cavalleri, Maria Chiara & Eliet, Alice & McAdam, Peter & Petroulakis, Filippos & Soares, Ana & Vansteenkiste, Isabel, 2019. "Concentration, market power and dynamism in the euro area," Working Paper Series 2253, European Central Bank.
    10. Ana Bottega & Rafael S. M. Ribeiro, 2023. "Kalecki meets Schumpeter: The decline of competition in a demand‐led dynamic model," Metroeconomica, Wiley Blackwell, vol. 74(3), pages 584-605, July.
    11. Villegas-Sanchez, Carolina & Díez, Federico & Fan, Jiayue, 2019. "Global Declining Competition," CEPR Discussion Papers 13696, C.E.P.R. Discussion Papers.
    12. Jasmine Mondolo, 2021. "Macroeconomic dynamics and the role of market power. The case of Italy," DEM Working Papers 2021/17, Department of Economics and Management.
    13. Damien Gaumont & Alice Mesnard, 2000. "Altruism and international labour migration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(1), pages 113-126.
    14. Michał Gradzewicz & Jakub Mućk, 2024. "Globalisation and the fall of markups," The World Economy, Wiley Blackwell, vol. 47(3), pages 1089-1116, March.
    15. Díez, Federico J. & Fan, Jiayue & Villegas-Sánchez, Carolina, 2021. "Global declining competition?," Journal of International Economics, Elsevier, vol. 132(C).
    16. Anderton, Robert & Jarvis, Valerie & Labhard, Vincent & Morgan, Julian & Petroulakis, Filippos & Vivian, Lara, 2020. "Virtually everywhere? Digitalisation and the euro area and EU economies," Occasional Paper Series 244, European Central Bank.
    17. Damien Gaumont & Charbel Macdissi, 2012. "International Migration And Uncertainty:A Non-Factor Price Equalization Overlapping Generations Model," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 55(2), pages 151-177.
    18. Mr. Federico J Diez & Jiayue Fan & Carolina Villegas-Sánchez, 2019. "Global Declining Competition," IMF Working Papers 2019/082, International Monetary Fund.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:16:y:2023:i:8:p:357-:d:1205260. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.