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Commercial Policy and International Factor Mobility in the Presence of Monopolistic Competition
Journal article   Peer reviewed

Commercial Policy and International Factor Mobility in the Presence of Monopolistic Competition

Sajid Anwar
Journal of Economics, Vol.74(3), pp.259-281
2001
url
https://doi.org/10.1007/BF01231350View
Published Version

Abstract

Economics international trade monopolistic competition
This paper utilizes a well-known specification of returns to specialization (a variation of the Spence-Dixit-Stiglitz model) to explore the implications of local agglomeration effects for commercial policy and restricted factor mobility. The paper initially considers a small open economy where it is shown that a tariff reduces the degree of specialization and hence the size of the external economies to the producers. An inflow of labor increases the degree of specialization while a capital inflow decreases it. The paper then considers a two-country world where both countries are large and deals with the pattern of trade and factor mobility.

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