Why are losses from trade unlikely?
Accepted version
Peer-reviewed
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Abstract
© 2015. Examining a standard monopolistic competition model with unspecified utility/cost functions, we find necessary and sufficient conditions on their elasticities for welfare losses to arise from trade or market expansion. Two numerical examples explain the losses (under unrealistic elasticities).
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Keywords
Market distortions, Trade gains, Variable markups, Demand elasticity
Journal Title
Economics Letters
Conference Name
Journal ISSN
0165-1765
1873-7374
1873-7374
Volume Title
129
Publisher
Elsevier BV