ASYMMETRIC OLIGOPOLY, INTERNATIONAL-TRADE, AND WELFARE - A SYNTHESIS

This paper analyzes the relationship between market shares and welfare under the assumption of Cournot-oligopolistic interdependence in prod uction. The model is general enough to deal with multiple countries, o ligopolists with different levels of marginal costs within each countr y, and any distribution of world demand across countries. It is found that the elimination of a ''minor'' firm harms the country if the coun try's total production is ''very little.'' However, such a policy alwa ys benefits the country if it exports the commodity. The welfare effec t of production subsidies and the case of foreign ownership of firms a re also discussed.