Special Issue in Memory of Michihiro Ohyama and Makoto Ikema
Monopolistic Competition and International Coordination of Entry Policy Revisited
2020 Volume 23 Pages 90-104
Details
2020 Volume 23 Pages 90-104
This study develops a model of international trade under monopolistic competition with non-homothetic quadratic preferences that generate variable markups, and analyzes the effects of trade liberalization and domestic competition policies. It is shown that, among others, trade liberalization may decrease firms’ profits in the short run and increases welfare in the long run. It is also shown that, depending on the parameters of the model, the mass of firms under cooperative solution can be higher or lower than the mass of firms under noncooperative solution.
JEL classification: F12; L50
