Trade liberalization, competition and growth
Licandro, Omar
Navas Ruiz, Antonio
Universitat Autònoma de Barcelona. Unitat de Fonaments de l'Anàlisi Econòmica
Universitat Autònoma de Barcelona. Institut d'Anàlisi Econòmica

Date: 2010
Description: 16 p.
Abstract: Increasing evidence support the claim that international trade enhances innovation and productivity growth through an increase in competition. This paper develops a two-country endogenous growth model, with firm specific R&D and a continuum of oligopolistic sectors under Cournot competition to provide a theoretical support to this claim. Since countries are assumed to produce the same set of varieties, trade openness makes markets more competitive, reducing prices and increasing quantities. Under Cournot competition, trade is pro-competitive. Since firms undertake cost reducing innovations, the increase in production induced by a more competitive market push firms to innovate more. Consequently, a reduction on trade barriers enhances growth by reducing domestic firm's market power.
Rights: Aquest document està subjecte a una llicència d'ús de Creative Commons, amb la qual es permet copiar, distribuir i comunicar públicament l'obra sempre que se'n citin l'autor original, la universitat, la unitat i l'institut i no se'n faci cap ús comercial ni obra derivada, tal com queda estipulat en la llicència d'ús Creative Commons
Language: Anglès.
Series: Working papers
Series: Working papers ; 806.10
Document: workingPaper
Subject: Comerç lliure ; Competència econòmica ; Desenvolupament econòmic

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16 p, 173.3 KB

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Research literature > Working papers > Fundamentals Unit of the Economic Analysis. Working papers

 Record created 2010-09-07, last modified 2020-01-13

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