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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. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 301

Abstract

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: http://cep.lse.ac.uk
Additional Information: © 1996 M.West
Subjects: H Social Sciences > HF Commerce
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 12 Aug 2008 12:30
Last Modified: 01 Oct 2010 09:16
URI: http://eprints.lse.ac.uk/id/eprint/20663

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