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Oligopolistic Competition, Firm Heterogeneity, and the Impact of International Trade

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  • Haiwen Zhou

    (Department of Economics, Old Dominion University, Norfolk, VA 23529, USA)

Abstract

This paper studies the impact of international trade in a general equilibrium model in which heterogeneous firms engage in oligopolistic competition. An increase of the size of the market leads to a decrease of the equilibrium price and an increase of per capita consumption. The opening of international trade leads to an increased degree of competition, a lower price level, and the exit of least efficient firms. Although average profit increases, not all the surviving firms benefit from the opening of international trade.

Suggested Citation

  • Haiwen Zhou, 2010. "Oligopolistic Competition, Firm Heterogeneity, and the Impact of International Trade," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(1), pages 107-119.
    • Handle: RePEc:pal:easeco:v:36:y:2010:i:1:p:107-119
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    References listed on IDEAS

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    1. Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 581-600, October.
    2. Haiwen Zhou, 2004. "The division of labor and the extent of the market," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(1), pages 195-209, July.
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    8. Larry D. Qiu & Wen Zhou, 2007. "Merger waves: a model of endogenous mergers," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 214-226, March.
    9. Richard G. Harris, 1995. "Trade and Communication Costs," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 46-75, November.
    10. Haiwen Zhou, 2007. "Oligopolistic Competition And Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 915-933, December.
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    14. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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    19. Haiwen Zhou, 2007. "Increasing Returns, the Choice of Technology, and the Gains from Trade," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 581-600, October.
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    Cited by:

    1. Yu Chen & Haiwen Zhou, 2017. "An Overlapping-Generations Model of Firm Heterogeneity in Economic Development," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 12(4), pages 660-676, December.
    2. Lei Wen & Haiwen Zhou, 2020. "Technology Choice, Financial Sector and Economic Integration Under the Presence of Efficiency Wages," Open Economies Review, Springer, vol. 31(1), pages 95-112, February.
    3. Jooyoun Park, 2018. "The Cleansing Effect of Offshoring in an Analysis of Employment," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(2), pages 242-272, April.
    4. Colacicco, Rudy, 2012. "The "Average" Within-Sector Firm Heterogeneity in General Oligopolistic Equilibrium," MPRA Paper 40212, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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