The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Competition in International Trade

  • D. K. Stout
Reference work entry


In international markets the equivalent of the owned assets and the skills of individuals and firms in internal markets is the difference in relative national resource endowments. In elementary theory, the effects of international competition are defined by comparison with an initial state of no trade. The typical question addressed is ‘What will happen if trade is opened up?’ On this view, international competition ‘causes’ trade because of the differences there would be, in the absence of trade, in the relative costs of production of pairs of goods in two countries. And the effect of international competition, and the ensuing trade, is to have ironed out some of these differences and to have increased in the process the aggregate equilibrium output of each good.

This is a preview of subscription content, log in to check access.


  1. Caves, R.E. 1971. International corporations: The industrial economics of foreign investment. Economica 38: 1–27.CrossRefGoogle Scholar
  2. Caves, R.E., and R.W. Jones. 1981. World trade and payments: An introduction, 3rd ed. Boston: Little Brown.Google Scholar
  3. Cornwall, J. 1977. Modern capitalism, its growth and transformation. London: Martin Robertson. ch. 10.Google Scholar
  4. Grubel, H., and P. Lloyd. 1975. Intra-industry trade: The theory and measurement of international trade in differentiated products. New York: Wiley.Google Scholar
  5. Houthakker, H.S., and S.P. Magee. 1969. Income and price elasticities in world trade. The Review of Economics and Statistics 51(2): 111–125.CrossRefGoogle Scholar
  6. Kanamori, H. 1968. Economic growth and exports. In Economic growth: The Japanese experience since the Meiji Era, ed. L. Klein and K. Onkawa. Homewood: Richard Irwin.Google Scholar
  7. Leontief, W.W. 1934. Domestic production and foreign trade. Economica Internazionale 7: 3–32. Reprinted in American Economic Association, Readings in international economics, Homewood: Richard Irwin, 1968.Google Scholar
  8. Linder, S. 1961. An essay on trade and transformation. Stockholm: Almqvist & Wiksell.Google Scholar
  9. Schumpeter, J.A. 1942. Capitalism, socialism and democracy. New York: Harper.Google Scholar
  10. Stout, D.K. 1977. International price competitiveness, non-price factors and export performance. London: National Economic Development Office.Google Scholar
  11. Thirlwall, A.P. 1980. Balance of payments theory and the UK experience. London: Macmillan.Google Scholar
  12. Venables, A.J. 1985. International trade, trade and industrial policy and imperfect competition: A survey. Centre for Economic Policy Research Discussion Paper No. 74, Oct.Google Scholar
  13. Vernon, R. (ed.) 1970. The technology factor in international trade. National Bureau of Economic Research Conference Series No. 22. New York.Google Scholar
  14. Wells, L. 1972. International trade: The product life cycle approach. In The product life cycle and international trade, ed. L. Wells. Cambridge, MA: Harvard University Press.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • D. K. Stout
    • 1
  1. 1.