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Free trade versus autarky under asymmetric Cournot oligopoly

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Author(s)

Rabah Amir, Jim Y. Jin, Michael Tröge

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Abstract

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.
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Original languageEnglish
Pages (from-to)98-107
Number of pages10
JournalReview of International Economics
Volume25
Issue number1
Early online date24 Aug 2016
DOIs
Publication statusPublished - Feb 2017

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