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Journal of Economic Integration 2006 September;21(3) :577-592.
Intra-firm Specialization, Income Distribution, and International Trade

Haiwen Zhou 

Old Dominion University
Copyright ©2006 Journal of Economic Integration

The impact of international trade on a firm’s degree of specialization and income distribution is studied in a general equilibrium framework in which firms engage in oligopolistic competition. International trade increases a firm’s degree of specialization, but the number of goods a country produces may not change. Trade may lower the welfare of the scarce factor of production. Sufficient conditions for a country’s welfare to increase with trade are provided.

JEL Classifications: F12

Keywords: Degree of specialization | Income distribution | International trade | Oligopolistic competition | Increasing returns to scale
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