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Journal of Economics

, Volume 74, Issue 3, pp 259–281 | Cite as

Commercial policy and international factor mobility in the presence of monopolistic competition

  • Sajid Anwar
Article
  • 56 Downloads

Abstract

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.

Keywords

international trade monopolistic competition 

JEL classification

F12 

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Copyright information

© Springer-Verlag 2001

Authors and Affiliations

  • Sajid Anwar
    • 1
    • 2
  1. 1.School of BusinessNorthern Territory UniversityDarwin
  2. 2.International Graduate School of ManagementUniversity of South AustraliaAdelaideAustralia

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