Constructing a two-agent model of international duopoly with increasing returns, the present paper examines potential gains from free trade. It is shown that under certain conditions, both agents in a country become worse off in free trade than in autarky with no redistribution. Further, the...

Purpose – This chapter aims to examine trade patterns and gains from trade in a two-country general equilibrium model of increasing returns and oligopoly. Approach – A general equilibrium model of increasing returns and oligopoly. Findings – The determination of patterns of specialization...

Constructing a two-good (competitive and imperfectly-competitive goods), two-primary factor (capital and labor) and two-country model of international trade where the imperfectly-competitive sector is subject to increasing returns to scale, we establish an oligopolistic version of the...