I explore the interactions between comparative, competitive and absolute advantage in a two-country model of oligopoly in general equilibrium. Comparative advantage always determines the direction of trade, but both competitive and absolute advantage affect resource allocation, trade patterns and trade volumes. Competitive advantage in the sense of more home firms drives foreign firms out of ma...

I consider the interaction of trade and environmental policies in two canonical models: competitive general equilibrium (which I extend to allow for monopoly power in trade) and multi-period oligopoly (which I extend to incorporate a general pollution abatement technology). Despite the complexities of the models and the considerable differences between them, they have surprisingly similar impli...

In a simple model where global trade negotiations precede sequential Free Trade Agreement (FTA) formation, we show global tari¤ negotiations can prevent global free trade: FTA formation can yield global free trade in the absence of global tari¤ negotiations, but global free trade never emerges when global tari¤ negotitaions precede FTA formation. Intuitively, global tari¤ negotiations can preve...

I argue that increased foreign competition can affect technical choice and skill differentials even when actual imports do not rise significantly. I present a model of General Oligopolistic Equilibrium ("GOLE") in which a reduction in import barriers (whether technological or policy-imposed) encourages more strategic investment by incumbent firms. The predictions accord with many of the stylise...

This paper analyses the impact of sanctions against Iran in addition to other country-specific determinants on intra-industry trade between Iran and Shanghai Cooperation Organization (SCO) countries over the period 1997-2013. By disentangling total intra-industry trade (IIT) into horizontal and vertical IIT and after investigating bilateral trade pattern between Iran and SCO countries, determin...

We show that a gravity model explains international transactions in "nancial assets at least as well as goods trade transactions. Our results support the hypothesis that informational asymmetries are responsible for the strong negative relationship between asset trade and distance. This result is very important for theories of asset trade, portfolio adjustments and home bias. We strengthen it b...

We evaluate two alternative models of international trade in differentiated products. An increasing returns model where varieties are linked to firms predicts home market effects: increases in a country’s share of demand cause disproportionate increases in its share of output. In contrast, a constant returns model with national product differentiation predicts a less than proportionate increase...

A two-country model of oligopoly in general equilibrium is used to show how changes in market structure accompany the process of trade and capital market liberalisation. The model predicts that bilateral mergers in which low-cost firms buy out higher-cost foreign rivals are profitable under Cournot competition. With symmetric countries, welfare may rise or fall, though the distribution of incom...

We examine the interaction between trade in goods and market power in domestic trade and distribution sectors. Theory suggests a linkage between service-sector competition and goods trade, one supported by econometrics involving import patterns of 21 OECD countries. This points to significant linkages between effective market-access conditions for goods and the structure of the service sector. ...

I show in this paper that incomplete contracts affect a firm’s decision about serving foreign customers through exports or local sales from an affiliated plant. When contracts between two agents within a firm are too costly to write, the share of multinational firms may be higher or lower compared to a world without contractual frictions. Incomplete contracts also provide a novel explanation fo...