Abstract
The export sector of a small open economy is assumed to be a price-taking monopoly with increasing long-run average cost and positive profit. Under such conditions, demands for productive factors are shown to slope downward in the general equilibrium of an otherwise competitive economy. Comparative static effects of changing prices and factor endowments are weaker than with a competitive export sector. The comparative static effects involving monopoly profit and outputs are examined.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Jones, Ron (1965) “The Structure of Simple General Equilibrium Models.” Journal of Political Economy 73: 557–572.
Jones, Ron and José Scheinkman (1977) “The Relevance of the Two Sector Production Model in Trade Theory.” Journal of Political Economy 85: 909–935.
Melvin, James and Robert Warne (1973) “Monopoly and the Theory of International Trade.” Journal of International Economics 3: 117–134.
Ruffin, Roy (1976) “A Note on the Heckscher-Ohlin Theorem.” Journal of International Economics 7: 403–405.
Thompson, Henry (1998) “Production with Two Factors and Many Goods: Large Firms in a Small Open Economy.” International Economic Journal 12: 20–31.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Thompson, H. Price-Taking Monopolies in Small Open Economies. Open Economies Review 13, 205–209 (2002). https://doi.org/10.1023/A:1013929432480
Issue Date:
DOI: https://doi.org/10.1023/A:1013929432480