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- Publisher
- Wiley
- Copyright
- The Editors of the Scandinavian Journal of Economics 2000
- ISSN
- 0347-0520
- eISSN
- 1467-9442
- DOI
- 10.1111/1467-9442.00189
- Publisher site
- See Article on Publisher Site
Abstract
In the presence of product market imperfections and holdup, we identify allocative and productive efficiency gains resulting from international trade. Under a bilateral monopoly in a closed economy, inefficiencies arise in both input and output markets. Trade in final goods has a procompetitive effect in the product market. This in turn triggers an increase in output, which raises incentives for the upstream firm to invest and helps reduce the hold‐up problem. JEL classification: F12; F13; F15
Journal
The Scandinavian Journal of Economics – Wiley
Published: Mar 1, 2000