Article ID Journal Published Year Pages File Type
983493 Research in Economics 2013 6 Pages PDF
Abstract

We argue that it is the distribution of market power among agents, rather than the use of market power itself, that may force Ricardian economies into autarky. By applying Baldwin (1948) monopoly equilibrium concepts to the general equilibrium with imperfect competition model analyzed by Cordella and Gabszewicz (1997), we show that the monopoly equilibrium outcome Pareto dominates the oligopoly one. As a consequence, economic efficiency is higher when market power is concentrated in one agent than when it is evenly distributed among few agents.

► The distribution of market power may lead to autarky in a Ricardian economy. ► The monopoly equilibrium Pareto dominates the oligopoly equilibrium. ► Concentrating market power may increase efficiency.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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