Oligopoly and trade: what, how much, and for whom?

Abstract

This paper integrates the Cournot oligopoly model with the Ricardian comparative advantage model. The Ricardian trade pattern is robust, and only can be reversed in extreme conditions. Trade volume increases substantially with increases in competition in world export industries. In a symmetrical world, a threshold level of competition determines whether capitalists as a group usually gain or lose from trade. Under all circumstances workers never lose even if a country has a comparative disadvantage in a perfectly competitive world industry, but workers gain less in that country than they do in the rest of the world.