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Gains from the trade: the hold up problem

West, M. (1996) Gains from the trade: the hold up problem. CEPDP (301). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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In the presence of product market imperfections and holdups, this paper identifies efficiency gains resulting from international trade and economic integration. In a closed economy, a bilateral monopoly is operating and inefficiencies arise in both the input and output markets. As the economy opens up to trade, procompetitive effects in the product market suppress the margin between prices and marginal costs increasing efficiency. If downstream firms become internationally mobile, productivity gains may arise from increasing returns to scale and intensified competition in the input market. The paper concludes with a discussion of the distribution of the welfare gains.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 1996 M.West
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HF Commerce
Date Deposited: 12 Aug 2008 12:30
Last Modified: 16 May 2024 11:19

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