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

A. Haufler, I. Wooton

Research output: Contribution to journalArticle

33 Citations (Scopus)

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.
LanguageEnglish
Pages239-248
Number of pages10
JournalJournal of International Economics
Volume80
Issue number2
DOIs
Publication statusPublished - Mar 2010

Fingerprint

Economic integration
Industry
Trade costs
Small countries
Government
Exogenous variables
Rent
Oligopoly
Tax

Keywords

  • tax competition
  • subsidy competition
  • oligopolistic markets
  • economic integration

Cite this

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Competition for firms in an oligopolistic industry : the impact of economic integration. / Haufler, A.; Wooton, I.

In: Journal of International Economics, Vol. 80, No. 2, 03.2010, p. 239-248.

Research output: Contribution to journalArticle

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KW - subsidy competition

KW - oligopolistic markets

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