On Sunk Costs and Trade Liberalization in Applied General Equilibrium

We argue that the rationalization gains often predicted by static applied general equilibrium models with imperfect competition and scale economies are artificially boosted by an unrealistic treatment of fixed costs. We introduce sunk costs into one such model calibrated with real-world data. We show how this changes the oligopoly game in a way significant enough to affect, both qualitatively and quantitatively, the outcome of a trade liberalization exercise

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Year of publication:	2010
Authors:	Mercenier, Jean
Other Persons:	Schmitt, Nicolas (contributor)
Publisher:	[2010]: [S.l.] : SSRN
Subject:	Theorie \| Theory \| Allgemeines Gleichgewicht \| General equilibrium \| Handelsliberalisierung \| Trade liberalization \| Sunk Costs \| Sunk costs

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Extent:	1 Online-Ressource (26 p)
Series:	CERGE-EI Working Paper Series ; No. 89
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 1, 1995 erstellt
Other identifiers:	10.2139/ssrn.1545007 [DOI]
Classification:	C68 - Computable General Equilibrium Models ; D58 - Computable and Other Applied General Equilibrium Models ; F12 - Models of Trade with Imperfect Competition and Scale Economies ; F17 - Trade Forecasting and Simulation
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013148360