The impact of international trade on a firm`s degree of specialization and income distribution is studied in a general equilibrium framework in which firms engage in oligopolistic competition. International trade increases a firm`s degree of specializ...
The impact of international trade on a firm`s degree of specialization and income distribution is studied in a general equilibrium framework in which firms engage in oligopolistic competition. International trade increases a firm`s degree of specialization, but the number of goods a country produces may not change. Trade may lower the welfare of the scarce factor of production. Sufficient conditions for a country`s welfare to increase with trade are provided.