| In the section | Articles |
| Title of the article | Factor Structure and Market Integration under Two-Factor Monopolistic Competition Model |
| Pages | 10-29 |
| Author 1 |
Evgeny Vladimirovich Zhelobodko Senior Research Fellow;Senior Lecturer National Research University Higher School of Economics; Novosibirsk State University 47 Rimskogo-Korsakova Ave., St. Petersburg, Russia, 190068;2 Pirogova Street, Novosibirsk, Russia, 630090 |
| Author 2 |
Sergey Igorevich Kichko Research Fellow National Research University Higher School of Economics 47 Rimskogo-Korsakova Ave., St. Petersburg, Russia, 190068 This email address is being protected from spambots. You need JavaScript enabled to view it. |
| Author 3 |
Philipp Anatolyevich Ushchev Senior Research Fellow National Research University Higher School of Economics 47 Rimskogo-Korsakova Ave., St. Petersburg, Russia, 190068 This email address is being protected from spambots. You need JavaScript enabled to view it. |
| Abstract | The authors study the impact of trade liberalization on the market of a differentiated good and consumers’ welfare. The economy involves two factors of production: labor and capital. The researchers find that consumers always gain from trade liberalization. The article also establishes that the behavior of equilibrium price is independent of factor endowments’ structure in the countries involved into trade. The equilibrium price decreases (increases, remains unchanged) under trade liberalization if and only if the inverse demand elasticity is increasing (decreasing, constant) with respect to the individual consumption level. Furthermore, firms’ size which are measured as output increases (decreases) when autarky changes to free trade if and only if the country is relatively richer (poorer) in capital than its trading partner, regardless of the demand-side properties of the economy. Finally, the behavior of capital price (which equals firms’ profits in equilibrium) is more complicated in the general case, but can be fully characterized for two limiting cases: (i) when the structure of factor endowments in both countries is the same, and (ii) when the Foreign country is a periphery country, i.e. it has zero endowment of capital. |
| Code | 339.5.012.42, 339.137.21 |
| DOI | 10.14530/se.2013.3.010-029 |
| Keywords | ? monopolistic competition ? international trade ? markets integration ? trade gain |
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| For citation | Zhelobodko E.V., Kichko S.I., Ushchev P.A. Factor Structure and Market Integration under Two-Factor Monopolistic Competition Model. Prostranstvennaya Ekonomika = Spatial Economics, 2013, no. 3, pp. 10-29. DOI: 10.14530/se.2013.3.010-029. (In Russian). |
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