Competition for firms in an oligopolistic industry: The impact of economic integration

Haufler, Andreas and Wooton, Ian (2010): Competition for firms in an oligopolistic industry: The impact of economic integration. In: Journal of International Economics, Vol. 80, No. 2: pp. 239-248

Abstract

We set up a model of generalised oligopoly where two countries of different size compete for an exogenous, but variable, number of identical firms. The model combines a desire by national governments to attract internationally mobile firms with the existence of location rents that arise even in a symmetric equilibrium where firms are dispersed. As economic integration proceeds, equilibrium taxes initially decline, but then rise again as trade costs fall even further. A range of trade costs is identified where economic integration raises the welfare of the small country, but lowers welfare in the large country.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Seminar for Economic Policy
• Subjects: 300 Social sciences > 330 Economics
• Language: English