The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Competition in International Trade

  • D. K. Stout
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_161

Abstract

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.

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • D. K. Stout
    • 1
  1. 1.